The global market for mergers and acquisitions has seen a "nascent" recovery, but it may take until the second half of 2010 for there to be a real uptick in announced transactions, JPMorgan's head of investment banking Douglas Braunstein said on Thursday.
"We all expected to have a strong 2010, but it has taken the first quarter for people to be assured that we're not going to see a double-dip," Braunstein said at the Tulane Corporate Law Institute conference in New Orleans. "Today signs are much more positive."
"We're seeing the beginning and seeds of movement; but the real expectation is that it will not be until the second half (of 2010)" to see a significant rise in transactions, Braunstein said.
Braunstein expects M&A activity overall to be greater than 2009, but added that "it's always easy to jump a low bar."
"We believe and expect and hope 2010 will be an active market," he said.
Much of the gains in deal activity will come from corporations, which have improved their balance sheets and also have greater access to capital.
Access to capital and the cost of that capital had never been better, Braunstein said. "Today the relative cost of funding is at or near all-time lows."
The reemergence of corporations on the acquisition prowl also has been driven by increasing confidence by chief executives in the economy and their ability to fund and execute deals, he said.
Braunstein expects more cross-border international deals.
"If you're selling a company and not thinking globally, you're not doing a good job for your client," he said.
In the private equity market, Braunstein said he expects a "return to normalcy," but the pace of leverage buyouts seen in 2006 and 2007 "are levels that we'll be unlikely to see in our lifetimes."
The size of LBOs will be smaller than the peak era of 2006-2007 and terms and conditions of deals will be more strict, he said.
He predicted an uptick in hostile deal activity and shareholder activism as investors press companies to return cash to shareholders.