According to a survey by KPMG LLP, the U.S. audit, tax and advisory firm, merger and acquisition (M&A) activity is expected to remain solid throughout 2014.  Of the more than 1,000 M&A professionals, investors and advisors who participated in the survey, 63% anticipate that their U.S. companies or clients will initiate at least one acquisition in 2014. 36% of respondents expect that their companies or clients will complete a divestiture in 2014. In addition to corporate buyers, 2014 could also be a very active year for private equity firms.

Some of the favorable conditions for growth through acquisition cited in the survey include significant cash on corporate balance sheets, more confidence in the overall economy, and continued low interest rates. Motivations for buyers to act include expanding into new geographies, increasing their customer base, and entering new lines of business.

Participants indicated that middle-market deals will dominate M&A in 2014, with 71% of respondents expect their respective deals to be valued under $250 million. The most important factor for deal success are a well-executed integration plan (38%), achieving an appropriate valuation/deal price (29%), and effective due diligence (20%).

The industries expected to have the most M&A activity are technology/media/telecommunications (44%), healthcare/pharmaceuticals/life sciences (41%), financial services (28%), and energy (27%). The top challenge cited by respondents in the technology /media/telecommunications sectors will be valuation disparity between buyers and sellers.

When asked about factors that could adversely affect deal activity in 2014, respondents cited a lack of suitable opportunities (32%), recessionary fears and the slow growth environment (29%) and regulatory considerations (18%). More than half of respondents said that it's too early to tell if interest rates will affect M&A, followed by 30% who said it won't have a meaningful effect on deals.

The top due diligence issues include assessment/volatility of future revenue streams (34%), quality of earnings (19%), and quality of assets (11%). The top integration issues are cultural and HR-related, according to 30%, followed by products and services integration (20%), then accounting and finance transformation (12%).