India Inc all set for M&A warpath: KPMG

Utamsingh added,”The increasing availability of deals in the global markets is a positive sign for Indian buyers as these deals will still be relatively cheaper than the prices that prevailed prior to the global crisis.”

Meanwhile,the private equity deals are also likely to rise in 2011 and 2012 as the Indian IPO market has been somewhat muted in the past six months.

“Increasingly,global private equity houses are targeting Indian buyers for their portfolio companies as they are realising that our large Indian business houses have the muscle power and desire to do international deals,” Utamsingh said.

According to KPMG International’s latest Global M&A Predictor,though there was a decline in M&A transactions in the first half,there is an encouraging downward trend in net debt/EBITDA ratios — which means that companies have lower debt levels.

According to global consultancy firm Grant Thornton,the first six months of this year saw M&A deals worth USD 26,743 million,down 7 per cent from last year when there were deals worth USD 28,892 million.

The declining confidence over the past six months may well prove to be just temporary,KPMG Head of Global of M&A David Simpson said.

“It’s also interesting to observe that total deal values have risen over the years while the volume of transactions is currently declining. This suggests that major cash-rich buyers are prepared to spend,while their smaller counterparts are playing more of a waiting game,fearful of making commitments in an uncertain economic climate,” Simpson added.

As per the KPMG study companies have lower debt levels and “with lower debt levels,companies should have a greater capacity to borrow money to fund any potentially attractive deal.”

Globally,the healthcare sector has very little debt,which puts many companies in this industry in a strong position to do deals. Conversely,utilities is the single most indebted sector,so acquisitions need to be funded by new equity or the disposal of existing assets.