M&A set to flourish in Scotland – if prices right

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SCOTLAND is poised for a strong run of mergers and acquisitions providing the gap in price expectations between buyers and sellers can be overcome, a new survey suggests.

The research points to the highest level of M&A activity taking place in the energy sector, with oil and gas deals likely to take centre stage.

However, just 3 per cent of those dealmakers polled expect to see corporate activity in the hospitality and tourism sectors while 15 per cent anticipate dealmaking within the food and drinks industry.

Overall, 97 per cent of those taking part in the survey by accountancy giant KPMG expect “healthy” levels of M&A activity in the coming year.

Craig Anderson, senior partner for KPMG Scotland, said: “Despite the sluggish performance of the UK economy, Scotland’s dealmaking community remains upbeat about the prospects for the coming 12 months.

““Predictions for healthy movement within the energy sector seem to have improved confidence for mergers and acquisitions, although the prospects for some sectors are much lower.”

Close to two-thirds of respondents cited price expectations between buyers and sellers as the number one challenge. Meanwhile, access to funding remains a top priority.

Anderson added: “The gap in price expectation between buyers and sellers may be a key stumbling block in deal completion but can, as some dealmakers have experienced, be overcome by negotiating sale terms based on future profitability and 
carrying out thorough due diligence.”

The survey predicted that much of the M&A activity would come from North American and Asian suitors.

KPMG said that in the first five months of 2013 its advisory team had experienced “strong demand”, with Scottish deal values in excess of £270 million.