As the M&A crazes cool down..
One of the main drivers of the increasing M&A deals for the past several years were due to the large cash balances the buyout firms or other potential acquirers held in their balance. But I guess these crazes have been cooled off last year due to the whole financial crisis. What I see in the near future is that those firms who really, really, really see some synergy or strategic considerations will attempt to go for the deal, and we know that most of the firms are facing liquidity risk these days.
So my guess is that most of the firms will become conservative when viewing the pitches what the IBs bring up to them. Instead of M&As, won’t strategic alliances become more prevalent in the near future than M&As?
Why share the power when you can have it all?
You'll see a lot more hostile takeovers and consolidations, as well as balance sheet restructuring going on.
Just my 2c.
I would think that as things start to pick up a bit, buyout firms/acquirers will be more than willing to buy. They'll see it as an opportunity to buy these targets on their way up rather than their way down - keep in mind that the market will likely "unfreeze" before values in firms start to head north. I wouldn't be surprised if the thawing of the market led to a whole shitload of deals.
Also, I get the feeling that one of the main reasons why there is such limited M&A going on outside of FIG is because of values. It's not so much that an acquirer isn't interested in buying a target, and it's not so much that a target isn't interested in selling to a acquirer, but more because (1)the value of the target is probably ~25-30% lower than it was a year ago and (2)the acquirer does not have access to as much credit as they did before.
When you see the market begin to thaw, you're going to see acquirers desperate to get their hands on some money to buy these targets at these discount prices. For many of these companies, nothing has changed about their operations - it's just a shitty market. This is going to lead to exactly what lorican said - more takeovers and consolidations.
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