Chicago -- The retail industry is poised for another year of heavy deal flow. Nearly all retail CFOs (94%) expect merger and acquisition will increase or remain steady in 2013, according to a new survey from BDO USA.
The bullish forecasts follow $324.6 billion in global retail and consumer M&A activity in 2012, which was up 33% over 2011 and the busiest year since 2007, according to Dealogic. A majority of CFOs (68%) expect the U.S. markets to see a majority of deal volume, followed by the Asia-Pacific market (20%) and Latin America market (7%).
Retail CFOs also forecast robust IPO activity in 2013. Following 13 U.S. retail public offerings in 2012 (according to Intrepid Investment Bankers), 83% of CFOs expect to see more or about the same number of retail IPOs this year. When asked what the biggest driver of a company’s ability to go public in 2013 is, CFOs point to the strength of the U.S. economy and stock market (42%), as well as strength of brand (24%) as top factors.
“In terms of overall M&A transactions, we’ve seen the fastest start to the year since 2005, and retail looks to be a bright spot for deal-making this year,” said Stephen Wyss, partner in the Retail and Consumer Products practice at BDO USA. “Steadier markets, renewed interest in international growth and the desire for omni-channel capabilities are fueling the investment rebound in retail and consumer businesses.”
Other major findings of the 2013 BDO Retail Compass Survey of CFOs:
E-commerce sector to drive IPO activity. Two-thirds of retail CFOs think e-commerce will see the most IPO activity in 2013, and a few companies have already taken strides to go public this year by hiring experienced executives and focusing on profitability and predictability of financials. Outside of e-commerce, successful IPOs from Bloomin’ Brands, Chuy’s and Del Frisco’s last year are likely influencing the 22% of retail CFOs who expect the food & beverage and restaurant categories to see the most IPOs in 2013.
Retailers give slight edge to strategic buyers. While deal flow in 2012 was driven by both financial and strategic buyers, CFOs are more bullish on strategic d