A new survey among middle market companies conducted by CFO Research Services, in collaboration with global commercial finance company CIT Group Inc. revealed that 76 per cent of senior-level finance executives from both U.S. and Canadian middle market real estate companies consider acquisitions to play a contributing role in their current business strategy, while 14 per cent said it plays a major role.
The study, entitled M&A in Challenging Times, was fielded in November 2007 and surveyed 529 senior-level finance decision makers at middle market U.S. and Canadian companies from a wide range of industries. Within this overall study, 30 executives in the real estate industry were surveyed.
60 per cent of real estate respondents said recent changes in capital markets will not have an impact on their companies’ M&A volume in the next 12 months, while 40 per cent said the changes will affect M&A volume.
33 per cent said that accessing domestic markets was a primary motivator in making their latest acquisition, while three per cent said that responding to competitors’ maneuvers was a motivator for acquiring a company.
Lack of transparency in a private company’s price, terms and other factors (37 per cent) and difficulty raising capital (33 per cent) posed the greatest challenges for middle market companies when seeking to acquire other businesses, compared with what larger firms experience.
When asked if their company is likely to divest part of its business in the next 12 months, 36 per cent said yes, while 50 per cent said it is unlikely that a portion of the business will be divested in 2008.
50 per cent of real estate executives said that communicating with customers, clients and shareholders was the greatest challenge when integrating a new acquisition.
Complete results of the entire study can be found at http://middlemarket.cit.com.