One Third of Global Businesses Actively Seeking M&A Targets in Next 12 Months

Majority believe tough financing challenges will remain for at least three
years

NEW YORK, Nov. 11 /PRNewswire/ -- There is a growing sense of anticipation
about the global M&A environment with 33% of businesses likely or highly
likely to acquire other companies in the next 12 months, according to a new
study of almost 500 senior executives around the world by Ernst & Young's
Transaction Advisory Services. In fact, 25% expect to do so in the next six
months.

The study, entitled Why capital matters - building competitive advantage in
uncertain times, is underpinned by the first in a regular series of surveys
called the Capital confidence barometer, which was conducted in October. The
survey finds that despite recognizing the opportunity for transactions, 62% of
businesses feel their ability to act is restricted by various factors,
including the lack of available financing.

Pip McCrostie, Global Vice-Chair, Transaction Advisory Services, at Ernst &
Young, says: "In the coming months, there is likely to be an increase in M&A
activity as companies dispose non-core, underperforming or distressed assets.
Those in a position to buy will have the opportunity to capture market share
and grow revenues in ways that were impossible two years ago.

Rich Jeanneret, Americas Vice-Chair, Transaction Advisory Services at Ernst &
Young LLP, says: "Companies are looking for ways to drive revenue growth
through M&A. Valuations are lower than they have been for many years,
providing potential opportunities for well-capitalized companies to expand or
redefine their businesses, increase their market share, or enter new markets."

McCrostie continues, "Buying will not be an option for all. Capital is no
longer cheap nor is it readily available. The tough new realities will force
some executives to seriously consider a strategic review. Many companies have
responded to the recession with short-term measures around cash and costs.
Sensible though these were, they are largely temporary, buying breathing
space. To thrive, companies need to be resilient and they also need to adapt
quickly. That means being able to compete strongly for new funding options in
a time of scarce capital, strengthening their core operations and having the
ability to make opportunistic decisions."

The survey found strengthening core operations is the primary transaction
driver, with 64% considering acquisitions for this reason and 50% of
executives are looking to acquire to enter new geographic markets -- nearly
half list the US as the most attractive developed market destination, while
emerging markets were dominated by India (30%) and China (27%).

Sixty-three percent of respondents are expecting to see acceleration of
industry consolidation in the next 12 months, while 61% expect the downturn to
reveal the emergence of a few industry winners best able to exploit
acquisition opportunities.

Adapting to uncertainty

While M&A confidence is up, a strong note of caution is also reflected in the
survey with 70% of companies expecting the downturn in the broader economy to
persist beyond the next 12 months. Of those, 40% believe it will continue for
more than two years.

Furthermore, 53% of respondents believe that financing conditions will not
return to mid-2007 levels for at least another three years with 19% believing
it will be over five years or it may never return to this level.

McCrostie continues: "In 2010 finance will continue to be very difficult to
secure. New options will need to be explored - from joint ventures to IPOs. In
this complex and uncertain environment a strong capital agenda will be central
to boardroom planning and strategy. Boards need new capabilities around
performance reporting, forecasting and strategic decision modeling around
capital that will, over time, become normal business practice. Leading
businesses recognize that amid the new risks there is also opportunity -
resilience must be enhanced alongside the ability to respond quickly as the
market changes."

Driving the capital agenda

While valuation uncertainty, insufficient financing, investor caution and
board scrutiny are cited as current obstacles to doing deals, raising capital
is recognized as a critical factor, with 46% prepared to consider alternative
deal structures that depend less on debt.

McCrostie adds: "We are already seeing leading boards drive a more focused,
disciplined and rigorous management of their capital. Different options will
suit different needs -- whether it's operational restructuring, divesting or
acquiring opportunistically, but doing nothing and trying to ride out the
storm is not a strategy for success."

Survival of the quickest

In an environment where further distress will drive short notice accelerated
timetables - readiness to act is critical for success. Forty-five percent of
executives expect an increase in distressed assets coming to market yet two
thirds are not confident in their ability to act quickly. Only 36% say they
are ready to act quickly should the right opportunity present itself.

"Boards will now need to juggle new demands in this environment. They will
have to maintain investor confidence, win the competition for scarce capital,
adapt to changing market conditions and exploit opportunities for growth. The
winners will avoid the temptation of inertia and have the confidence to use
their capital at a time when rapid decision-making could make the crucial
difference between success and failure elsewhere," says McCrostie.

"The market will divide into those who quickly adapt and thrive and those who
play by the old rules for these very new market conditions. A nimble response
is needed, no matter the size of the organization - much like time and tide,
market share waits for no man."

About the survey

The Ernst & Young Capital confidence barometer is a survey of 490 senior
executives from large companies around the world and across industry sectors.
The Barometer will be re-run throughout 2010 to gauge shifts in board room
sentiment, confidence, focus and activity as the dynamics of the
post-recession environment become clearer.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory
services. Worldwide, our 144,000 people are united by our shared values and an
unwavering commitment to quality. We make a difference by helping our people,
our clients and our wider communities achieve their potential. For more
information, please visit www.ey.com.

Ernst & Young refers to the global organization of member firms of Ernst &
Young Global Limited, each of which is a separate legal entity. Ernst & Young
Global Limited, a UK company limited by guarantee, does not provide services
to clients.

This news release has been issued by EYGM Limited, a member of the global
Ernst & Young organization that also does not provide any services to clients.

SOURCE Ernst & Young

Natalie Ignatovicz, Fleishman Hillard Public Relations, +1-212-453-2449,
Natalie.ignatovicz@fleishman.com; or Tanya Valle, Ernst & Young LLP,
+1-201-872-1688, Tanya.valle@ey.com