As they headed into 2009, chief executives at top U.S. manufacturers were licking their chops at the thought of the M&A bargains they would find in the midst of the worst recession since the Great Depression. The takeover feast they hoped for has not materialized, but the chief financial officer of 3M Co said on Wednesday he believes that may start to change.

“I honestly had anticipated that the M&A market was going to be a better market during this recessionary period. It really hasn’t panned out that way,” Patrick Campbell, CFO of the St. Paul, Minnesota-based company told an investor conference in New York. “A lot of companies were either holding their breath waiting for the recovery to happen or they were looking back to where their stock price was before. And honestly that’s the price they wanted and we weren’t ready to pay a price that was based on a previous peak.”

Deal flow may start to pick up when the economy begins to turn and companies find themselves needing money quickly to respond to returning demand, Campbell said.
“Maybe it’s yet to come,” he said. “As volume comes back for many suppliers, many companies, this may actually be the stress point for them relative to their financing needs, as they need to fund working capital requirements and so forth … This could actually be the point where maybe we start to see some companies that maybe become a little more distressed in the recovery phrase. We’ve got our eyes wide open on that.”