BANKING/FINANCE : More Mergers Among Mid-Size Companies Likely, Exec Says

By Compiled by James S. Granelli / Times staff writer

Jan. 10, 1990 12 AM PT

Despite a slower economy and continuing predictions of a recession, the number of U.S. mergers and acquisitions among mid-size firms should grow 8% in 1990, according to estimates by the Geneva Corp., an Irvine mergers and acquisitions firm.

Geneva projects that about 20,000 privately held, mid-size companies will change hands this year, about 1,500 more than last year. The firm defines such companies as those with annual sales between $1 million and $250 million.

“We are very optimistic that middle-market merger and acquisition activity and the value of mid-size private companies will remain strong throughout 1990,” said Ronald J. Speyer, a Geneva division president.

“However, deal structuring could be dramatically affected by negative developments in the economy, financial markets and tax legislation,” he said.

Foreign buyers are spurring the continued interest in American firms, looking especially for those with “earning potential, dividend-paying capacity and growth prospects,” Speyer said.

But Congress could limit foreign purchases as it considers proposals to limit the amount of direct foreign investment in the United States, introduce capital gains tax on foreign investors and sharply curtail acquisitions of electronics and defense companies on national security grounds, he said.

The uncertain future beyond the next 12 months should make 1990 the “year of the seller,” Speyer said.