"People have come to realize how difficult it is to integrate companies" from emerging-market countries, says Tom Sauermilch, partner and co-head of the M&A practice at law firm McDermott Will & Emery. "Lots of management time is devoted to them, you have to be very patient — culture, travel, and compliance" are the big challenges.
Still, there are a few pockets where business is brisk.
Stephen Guy, managing director at KPMG Corporate Finance, says two groups of U.S. companies are driving what M&A business there is. The first consists of owners of smaller private companies who want to sell before higher capital-gains taxes kick in Jan. 1 that would make it less lucrative to sell in the future. The second involves large companies that want to prune units that are less profitable or no longer fit their strategy.
But Guy also said that sellers have lower expectations for what they can get, even compared to just 18 months ago.
"They're pretty pessimistic about the next 12 months," Guy says, "so they're thinking, 'Better take what I can get.'"
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