Let’s Make a Deal

25 February 2008

Lately I have been asked (more than a few times) if the appetite for mergers and acquisitions among companies is diminishing.Handshake

In general, I don’t think it is.

Because of the recent worldwide credit crunch, those companies that are required to take on significant debt to fund an acquisition will have difficulty.  It is difficult to find lenders these days.  However, those companies with strong balance sheets, and/or the ability to use their stock price as currency, have the capacity to continue making deals.  Microsoft’s recent offer for Yahoo! is just one (very large) example.

For many of these cash rich companies, M&A is the most important vehicle for growth.  Growth is often the most important catalyst for increasing shareholder value.  Therefore, the M&A environment isn’t likely to slow down any time soon.

So, let’s make a deal!

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