Impact of Quantitative Easing on M&A given cheaper cost of capital
My understanding is that Quantitative Easing is believed to trigger more M&A activity given the cheaper cost of financing. However, at the same time, valuations surge.
So if I am an acquirer, I would have access to relatively cheaper funds, but would face a relative higher valued target firms. So what the difference/benefit here? what is the logic then, behind why QE is believed to trigger M&A activity ?
Thanks
The cheaper financing facilitates higher multiples. Acquirers can stretch to make acquisitions since the cost of funding the acquisition is relatively low.
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