Patience needed in post-Lehman deal making

By Megan Davies and Quentin Webb

NEW YORK/LONDON (Reuters) - Dealmakers are not known for their patience. Yet that's what's needed more than anything else a year after Lehman's collapse.

It takes months longer to close a deal, the number and size of transactions has shrunk, and mergers and acquisitions fees have plummeted. Much of the M&A work now is either advising failed companies on restructurings or organizing fire sales.

"The nature of M&A has changed fundamentally," said Antonio Weiss, Lazard global head of M&A. "On one end of the spectrum, there's an increase in volume of distressed activity and on the other, well-capitalised corporations have a chance to revisit acquisition ideas at lower values."

Transformational deals have been few and leveraged buyouts are just not there -- yet. But there are bright spots, such as this week's unsolicited bid by U.S. firm Kraft Foods Inc for the UK's Cadbury Plc, and confidence has started to return.

"Many CEOs feel we've bottomed," said James Stynes, global chairman of M&A at Deutsche Bank. "We are starting to see a pickup that could make 2010 more positive than people originally thought."

That's a sea change from last year.

"There were certain points over the last year when it was ... so incomprehensible to go talk to a board about a deal," said one senior dealmaker who declined to be named. "It was just not a topic that belonged in the board room."

CEOs had bigger fish to fry -- plummeting share prices, hard-to-get credit and ballooning inventories.