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M&A Advice for the Brave

Posted by: Emily Thornton on January 12, 2009

Consumer confidence is shattered. Credit has tightened. And companies are about to be hit with hundreds of billions of dollars of debt maturities scheduled to come by the end of 2009.

So it’s no wonder that most CEOs are feeling a little a gun shy about doing big deals. In 2008, companies announced only $2.9 trillion worth of mergers and acquisitions, a fraction of the $4.2 trillion announced the previous year, according to ThomsonReuters. And most bankers do not expect mergers to come roaring back any time soon.

Nevertheless, as for those CEOs that can put their nerves aside, the chances for snapping up a rival on the cheap have never been better. There are few buyers out there to bid up prices, leaving the field wide open for those who dare to attempt to snap up an asset for a cheap price or even take out their rivals.

In fact, Boon Sim, head of mergers and acquisitions at Credit Suisse, advises executives that they “should aggressively go out and look at companies that have in the past said no to them.” With the overall stress and nervousness about the economy, Sim argues, “shareholders are likely to be more responsive to an unsolicited offer.”

Plus the list of vulnerable players will likely get longer. Many companies are “suffering from a financial crisis, a business model crisis, or both,” says Paul Parker, head of global mergers and acquisitions at Barclays Capital.

Reader Comments


January 15, 2009 4:05 PM

The CEOs with the cash are in China.

The rest are playing with fire in this risk averse and debt averse environment.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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