The slow economy has reduced the appetite for many California companies to take part in mergers and acquisitions. In a sign, though, that things may be looking up for M&A, many executives in the food and beverage industry foresee a renewed thirst for mergers and acquisitions in their businesses in the coming two years.

A survey conducted by audit firm KPMG found that 67 percent of the executives in food and beverage businesses who responded to the survey believe they will be involved in a merger or acquisition in the next 24 months. Do they believe they will be buyers or sellers? The responses were nearly evenly split.

One theory is that potential sellers have brands that they no longer want to invest in, but have been unable to find a buyer for in the economic downturn. They held onto the brands in the meantime, but now there is some desire to find buyers and concentrate on their primary strategy.

Buyers have cash reserves that have built up and not been spent, since the economy made management too nervous about spending money of any kind. Now there is pressure to put that money to work and get some better returns for it than can be gotten just holding onto it.

San Diego mergers and acquisitions attorneys noted that the survey found that almost 40 percent of the executives surveyed said they planned to make an acquisition this year. Another nearly-40 percent said it would be next year before they made a move on a merger or acquisition.

Nearly half of the respondents said they would be adding jobs to their businesses in the next year, but not in great numbers. Most said the increase would be less than 6 percent over the number of employees they have now.

Source: Reuters “Exclusive: Food, drink execs expect M&A in next two years” 7/25/2011