Why arent there more M&A deals going on?
Yea, the economy is a bit shaky and the crisis in Europe is scary. But interest rates are low. Debt is pretty cheap now. Why arent there more M&A transactions?
"A bit shaky" is putting it lightly. I would say it's the same reason corporations have trillions of cash reserves built up right now, they are scared about the environment and about the rule of law.
Debt is cheap, but leverage levels are down. Policy makers seem capable of pulling out the rug at any time and people are cautious.
debt is cheap, so wheres the return for bondholders/creditors with the economy in shit and the chance of default so high. Just because its cheap doesn't mean its easy to get.
Uncertainty.
Riskkkkkkk
The M&A markets is ultimately determined by CEO sentimentality. When the equity markets are up, rising and stable, CEOs feel good and are bullish about buying and selling companies. They buy more because they anticipate future growth and synergies to be realized. They sell because they are comfortable selling companies / assets at high price / valuations. When the markets are volatile and depressed (as it is now), it is hard for CEOs to project out growth and sell when asset prices are way off their 52 week / all-time highs...
Thus, M&A markets are up during the good times and down during the bad times. That is why a primarily M&A-focused shop like Lazard purchsed Lazard MM to pursue restructuring, which is a natural buffer. Restructuring behaves in opposite ways in which it goes up during bad times and down during good times.
Ignore secondary effects like financing costs and interest rates. These factors help, but do not determine M&A levels. Primarily, M&A levels are a function of corporate sentiments.
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