Deal Makers Hope for Merger Magic at Davos

DAVOS, Switzerland - Amid the frenzy of meetings at the World Economic Forum in Davos last January, the heads of the global advertising rivals Publicis and Omnicom found time for an informal chat.

Six months and many conversations later, the giant agencies announced a $35 billion merger that reshaped their industry and ranked as one of the biggest business transactions last year.

The organizers of the World Economic Forum might like to promote their annual snow-capped summit meeting as the place where global decision makers can â€" as the website puts it â€" “develop the insights, initiatives and actions necessary to respond to current and emerging challenges.”

But for a lot of executives, it is a place for the kind of social networking that can lead to business deals.

At the time of their first meeting here last January, neither ad company’s top guy thought much would come of their chat. “It was not calculated, it was just an encounter we do socially from time to time,” Maurice Lévy, the head of Publicis, told Bloomberg News last summer.

But the chance for such encounters is precisely what keeps the deal makers coming to this Swiss resort, where this year’s forum begins on Wednesday. As corporate chieftains and senior bankers mingle at the Congress Center and rub elbows at cocktail receptions, many hope merger magic might strike again.

The gathering this year, in fact, is taking place during what financial advisers hope will be the start of a long-awaited deal-making renaissance. Last year proved to be the slowest period for mergers and acquisitions since 2009. Global deal volume in 2013, at $2.4 trillion, was off 6 percent from the previous year, according to Thomson Reuters.

But corporate advisers now say a sense of calm and stability has descended upon the global business landscape as a result of factors like booming stock markets and renewed consumer spending, potentially emboldening companies to make acquisitions.

And debt markets remain wide open, as evidenced by continued low interest rates and an eagerness by lenders in the United States to provide financing, easing the way for would-be buyers to borrow or raise the money for takeovers.

“Given our pipeline of deals and today’s strong debt and equity markets, which help fuel divestitures and exits, we expect that M.&A. momentum to continue into next year,” Martyn Curragh, the leader for deals in the United States for PricewaterhouseCoopers, wrote in the firm’s 2014 outlook last month. He noted that the average monthly deal volume rose by nearly 10 percent from the first half of 2013 to the second half, climbing to 886 transactions per month.

Corporate luminaries might be hoping this momentum will carry them to new business heights in the rarefied Alpine air.

Bankers will certainly be ascending in force. Goldman Sachs’s expedition will include eight senior executives, including Lloyd C. Blankfein, its chairman and chief executive. JPMorgan Chase is sending five top officers, led by its chief, Jamie Dimon.

The delegation from the investment bank Lazard will include Kenneth M. Jacobs, its chairman and chief executive, and the deputy chairman, Jeffrey A. Rosen, a veteran of many a World Economic Forum.

“To generalize, a lot of transactions that materialize six to 18 months after Davos started at Davos,” Mr. Rosen said. “They started from an idea that arose from a conversation or relationship that began there.”

Potential buyers will also be braving the cold. Google’s executive chairman, Eric E. Schmidt, is a Davos regular. And Yahoo’s chief executive, the highly acquisitive Marissa Mayer, is presiding over this year’s forum.

Private equity firms, the consummate corporate acquirers, will have a healthy representation, too. The Blackstone Group contingent includes Stephen A. Schwarzman, its co-founder and chairman, and John Studzinski, the head of the firm’s advisory practice. The Carlyle Group will have its co-founder and co-chief, David M. Rubenstein, on hand.

But the breadth of attendees here â€" senior government officials among them â€" can help foster all sorts of clubby deal-making beside mergers and acquisitions.

Two years ago at the forum, executives from the New York Stock Exchange and Deutsche Börse embarked on an aggressive, if ultimately unsuccessful, effort to persuade European antitrust regulators to approve their $9 billion merger. And last year, Royal Dutch Shell signed a $10 billion deal with Ukraine to drill for natural gas in the country.

According to Mr. Rosen, the sheer concentration of attendees makes it likely that V.I.P.’s will have those serendipitous chats that can lead somewhere important â€" or at least lucrative. And the atmosphere promoted by Klaus Schwab, who founded the forum in 1971 and is now its executive chairman, encourages attendees to drop their guards, at least a little.

To Mr. Rosen, those chance encounters can be far more productive than formal meetings planned months in advance.

“That informality,” he said, “leads to a more creative, expressive discussion.”