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Credit Insights

Green Shoots Emerge in a Still Bleak M&A Landscape

We expect M&A trends to hold steady, despite the weakened fundamentals in Europe and China as well as mixed economic indicators in the U.S.

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Acquisition activity has yet to pick up speed following a weak end to 2011, but the ingredients for M&A are still in place. Cash-rich balance sheets, an increased desire for a global presence, and the appeal of M&A as a source of growth sustain the M&A appetite for strategic buyers. In addition, private equity fundraising has picked up while exit activity remains robust, producing plenty of available capital.

Economic uncertainty and anemic credit markets remain as key challenges, but these are smaller hurdles for certain sectors. We do not anticipate an acceleration in deal activity for the remainder of 2012, but we expect M&A trends to hold steady, despite the weakened fundamentals in Europe and China as well as mixed economic indicators in the U.S.

David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.