Highlights from PwC’s Mid-Year Forecast

The firm puts out an M&A and private equity forecast every six months. It’s 2008 mid-year effort is due out this week, and I’ve boiled down the conclusions it’s drawn. The second half of 2008 will see the following, according to PwC:

-US private equity shops will continue to take investments from foreign entities in an increased capacity.

-Changes in carried interest law could lead to an influx of deals in the fourth quarter of this year.

-Further, FAS 121(R) and FAS 160 will motivate firms to close deals before December and take on more minority stakes by the end of the year, respectively.

Industry specific conclusions:
-Consumer Products companies will shed non-core and underperforming assets.

-Energy companies in the equipment and services sector will experience a wave of consolidation to last another year at least. Master Limited Partnerships (MLPs) are just beginning to consolidate thanks to struggles with competition and deal pricing.

-Within technology, Internet companies are the most attractive and small and medium-sized ad-driven businesses will see consolidation, driven by interest from European and Asian suitors.

-PwC predicts sales in the auto industry will be hurt this year, falling to its lowest number in 13 years.

-The firm believes opportunities to infuse capital into financial services businesses is an attractive one.