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M&A to Grow More ‘Robust’ Next Year, Effron Says

The pace of mergers and acquisitions will become “more robust” in 2013 after this year’s decline, said Blair Effron, a co-founder of the Centerview Partners LLC advisory boutique.

“Based on the dialogue we see among companies, I don’t necessarily see companies, long-term, wanting to sit on their hands,” Effron said today at the Bloomberg Dealmakers Summit in New York. Clients at Effron’s New York-based firm have included PepsiCo Inc. and News Corp.

Companies have announced $1.75 trillion in deals this year, or about 13 percent less than the $2.02 trillion at the same point in 2011, according to data compiled by Bloomberg. Activity rose in the previous two years as economies around the world emerged from recession.

“As sort of a day-to-day banker, it doesn’t feel like a down time,” said Jonathan Knee of New York-based Evercore Partners Inc., the author of “The Accidental Investment Banker.” “It feels like a time when everybody is looking at everything.”

In the U.S., there have been $662 billion of transactions in 2012, or 20 percent less than during the same period last year. Peter Solomon, founder of New York-based Peter J. Solomon Co., said concerns about the strength of the U.S. recovery will push companies to make purchases to spur revenue.

Seeking Growth

“You have to acquire today to grow,” said Solomon, whose firm has advised clients including Walgreen Co. and PVH Corp. “There’s not growth in the American economy.”

U.S. prospects, however, may look brighter from a distance. Steven Baronoff, the head of M&A at Bank of America Corp., said companies outside the U.S. are pursuing acquisitions here because its economic growth prospects are stronger compared with many other countries.

“It’s a very attractive market compared to Europe,” Baronoff said in a separate panel discussion at the Dealmakers Summit today.

The transactions taking place now tend to involve top-quality assets, said Jeffrey Solomon, head of Cowen Group Inc.’s brokerage subsidiary. Just as investors in equity markets are chasing the safety of low-risk, dividend-paying stocks, acquirers in the M&A market are only willing to do quality deals with less risk, he said.

“People are crowding around the best assets,” Solomon said.

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