Good businesses will get good prices.

• Position: Mergers & Acquisitions - Panel Discussion

Major investment banking firms face 1992 with restrained optimism on merger and acquisition activity. In a recent roundtable discussion with Mergers & Acquisitions magazine (an affiliate publication of Directors & Boards), a group of investment bankers prognosticated on the M&A market for this year. Here is a summary overview of their projections.

After two tough years, the engineers of large deals believe that the worst of the M&A slump is behind them, but that a vibrant, broad-based market is still not at hand. Yet, dealmaking should be active in selected areas in which M&A is the most viable strategic alternative.

The IPO Option. Pricing equilibrium in the M&A market will remain elusive, as long as potential sellers can opt for public offerings to fetch more generous values. "In certain growth industries, such as consumer products, pharmaceuticals, and biotechnology, in which public market pricing is very high, an IPO may generate better pricing than the M&A market," says James W. Meyer, senior vice president of Lehman Brothers. In many cases, he adds, the IPO market "offers the best return and the best strategy to maximize long-term shareholder value."

A Halting Comeback for M&A. IPOs may work for growth and glamour companies, but more mundane commodity and industrial companies must sell through M&A channels. They will sell but, as Gordon A. Rich, First Boston Corp.'s director of mergers and acquisitions, says, "This is not the time you can promise most sellers that you can get a great price." On a more hopeful note, John A. Golden, partner at Goldman, Sachs & Co., counsels that "Good businesses will still get good prices, notwithstanding what the general climate may be."

The Need to Go Global. Cross-border acquisition activity should pick up in selected industries that are fragmented and where global presence is required. Food, pharmaceuticals, and financial...