Confidence on the rise as 57% of firms actively eye takeovers

GLOBAL merger and acquisition activity is set for an upturn, with twice as many businesses actively seeking targets in the next 12 months, compared with six months ago.

Some 57 per cent of businesses are likely or highly likely to acquire other companies in the next year, almost double the 33 per cent of six months ago, according to an Ernst & Young survey of 800 senior executives around the world.

The accountancy firm's survey shows that 47 per cent expect to take over another company in the next six months compared to 25 per cent when the same poll was undertaken in November.

Alec Carstairs, a partner at Ernst & Young, said: "With greater liquidity, we're seeing companies more willing to make acquisitions they have previously deferred.

"We now have more potential buyers than willing sellers, which could lead to an increase in hostile approaches."

Confidence in the global economy has also improved. About 40 per cent of respondents expect the downturn to end within 12 months, compared with 30 per cent six months ago.

Meanwhile, 64 per cent of respondents were more optimistic about the prospects for their local economy and 69 per cent for the prospects for their company. The most optimistic countries were found to be Australia (93 per cent), India (91 per cent), Brazil (83 per cent) and China (80 per cent).

Some western developed markets were the least confident: in France only 44 per cent of respondents were more optimistic about the prospects for their economy than the global economy, while in the US the figure was 56 per cent and in Britain it was 57 per cent.

About 62 per cent of companies expect to obtain finance to fund projects and acquisitions.