Executives anticipate an increase in mergers and acquisitions (M&As) and strategic alliances over the next two years, according to new findings. Manufacturing leaders, in particular, are bullish about M&A activity through 2014 as they seek strategic alliances in emerging markets.

Internationally, merger and acquisitions (M&A) volumes dropped 24 percent in the first quarter of 2012 from Q4 2011 and were down 26 percent year-over-year, reflecting market uncertainty in 2011, according to Ernst & Young’s latest M&A Tracker. Moving forward, however, executives anticipate an uptick in both M&A and strategic alliance activity over the next two years, Deloitte’s new Corporate Development survey found.

Of 309 executives surveyed, Deloitte found that almost half expect an increase in M&A activity.

Executives in the manufacturing sector seem to be the most bullish on M&A prospects, with more than half telling Deloitte they expect an increase in strategic alliance transactions driven by investment in emerging markets and a need for more judicious deployment of scarce capital.

While 46 percent of total respondents project an increase in M&A transactions through 2014, approximately 62 percent of manufacturing executives expect to accelerate M&A activity over the same period.

Deloitte attributes the expected increase to growing investment in developing economies and companies’ need to secure capital.

“Strategic alliances and joint ventures can be difficult transactions, nevertheless we are seeing a notable uptick in this area,” Chris Ruggeri, a principal in the Advisory Services practice at Deloitte Financial Advisory Services LLP, said in an announcement of the findings last week. “The perception of strategic alliances is changing from a last resort to a preferred investment strategy, especially in emerging markets, and companies are learning from industries like technology and life sciences that use strategic alliances very effectively to manage risk and capital.”

Based on interviews with 60 senior executives of large, multinational U.S. industrial manufacturing companies, PricewaterhouseCoopers (PwC) earlier this month reported that the number of respondents planning M&A activity in 2012 rose five points to 43 percent, with 42 percent considering the purchase of another business. In its Q1 2012 Manufacturing Barometer, PwC reports that while the number of new joint ventures dropped 12 points from the fourth quarter of 2011 to 28 percent, plans for expansion into new markets abroad remained high at 35 percent, and plans for new strategic alliances was 35 percent.

“The mandate these days is about doing more with less; creatively finding ways to grow with controlled investment funds,” Ruggeri said in Deloitte’s Corporate Development 2012: Leveraging the Power of Relationships in M&A. “Smaller deals, strategic alliances and smart divestitures appear to be the result, with corporate development teams tasked to exercise their business planning skills as much as their deal-making skills.”

While 40 percent of respondents ranked mergers as the most difficult type of deal to execute, nearly a quarter (23 percent) indicated that joint ventures and strategic alliances present a greater challenge. Less than half (45 percent) of executives at companies that completed one to four deals annually indicated that their corporate development group was extremely or very effective, compared with 70 percent at companies that complete five or more deals each year.

More than 40 percent of executives concede that their companies are less skilled at executing strategic alliances than mergers. As to why strategic alliances stall or break down, executives most frequently cited partners’ differing views and their inability to align strategy.

Deloitte’s data suggest that corporate development teams should consider acquiring some new skills that are often outside the core competency of the classic “deal jockey.”

“The ability to collaborate has become paramount, as smaller staffs must leverage expertise both inside and outside of their organizations,” the Corporate Development 2012 study states. “This ‘partnering’ takes many forms, involving colleagues, board members and sometimes even competitors. Mastering the art of collaboration is not easy, but promises to make corporate development an increasingly important stop on the path to becoming a leader.”