Currently studying IB and the different main activities (capital raising, M&A Advisory, etc).
It would make sense to think that a down financial market would not be favorable for capital raising especially ECM. However, what about an acquisition either by a strategic buyer or a financial sponsor?
If the acquirer is public and decides to use a consideration of cash and stock, then I can see that this could be unfavorable to them since the value of their stock is lower, but then again, if the target company is public as well, they could also be roughly equally affected, cancelling out the effect. Further analysis and valuation could determine this.
But if the acquirer chooses a pure cash consideration then it might be beneficial for them to acquire a target during a down market. What is generally the most "favorable market conditions" for M&A's?
You'd want higher valuations if issuing your own stock. Also would want low interest rates if using debt.
Regarding your cash question, it's still important to have lower interest rates because it's means a lower foregone interest income on cash and even if they use excess cash, they'll lose financial slack and lower interest rates would be better for future borrowing needs
I see,
Especially if they decide to use a floating exchange ratio on their stock consideration which lowers the amount of shares to be given right? Thanks bro!
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