WASHINGTON, DISTRICT OF COLUMBIA, Nov 12 (MARKET WIRE)
--
In an article in Global Finance Magazine Dr. Alexander Mirtchev,
economics expert and president of Washington-based Krull Corp., a
consultancy with a focus on new economic trends and emerging policy
challenges expounds on the signs of revitalization in the international
mergers and acquisitions market. He assesses the implications of the
resurgence of investment activity and the potential repercussions of the
growing trend of investors' "clubbing together" for major acquisition and
investment deals.
After the international M&A activities "cratered" in the midst of a
global recession, there are finally indications that corporate tie-ups
and "teaming-ups" are once again becoming an attractive form of
prioritizing investment activity. According to Alexander Mirtchev,
"looking towards recovery, joining forces allows investors to achieve
better terms and access 'tailor-made' financing tools. This has led to
intensifying interest in mergers and acquisitions of a size that until
recently appeared unviable due to the impact of the global economic
crisis." Despite the fact that global economic recovery is
"moderately-paced and uneven," he added, "M&A activity has picked up
noticeably, perhaps even beyond the level that is perceived to correspond
to the actual state of the global economy."
The rationale for the recent resurgence can be seen not only in efforts
to tackle the effects of the crisis, but represent also the "long view"
of recovery in the post-crisis period. From Mirtchev's perspective,
mergers and acquisitions are not simply driven by the growing perception
that asset prices have dropped to a level that makes them attractive.
"Rather, a number of major corporate alliances and acquisitions reflect
the drive to develop synergies beyond the immediate," he indicates.
"Merger and acquisition activity is being driven not just by the growing
perception of attractive asset values in the wake of the crisis. Stronger
investment interest is also due to the momentum of private equity firms,
investment companies and sovereign wealth funds "teaming up" in order to
achieve shortcuts to improved market knowledge, better trading terms and
increased opportunities for investment with a realistic medium to
long-term significance."
According to Mirtchev, "there is, in addition, a view among major
investors that combining forces brings new resources to bear to a
particular project, as well as enhancing the level of expertise brought
to the table. The primary advantage of forming clubs is to spread the
risk while increasing potential profits. Meanwhile, the co-financing is
welcome at a time when lack of financing is the biggest impediment to
dealmaking." Skeptics would suggest that, given uncertain demand, M&A
recovery reflects the desire by CEOs to use cash to eliminate their
weakened competitors rather that invest in organic growth and innovation.
From Mirtchev's vantage point, this is a sign of maturity by investment
companies and funds, which are now interested not only in short-term
gains or in "glamour investments", but are more focused on the results in
the long-run.
Moreover, a number of investors are showing greater willingness to join
forces, in order to pool their exposure to risk, generate additional
opportunities and multiply the effect of their resources. "The increased
willingness of investors to share the benefits from an acquisition in
order to introduce elements of comparatively independent supplementary
financing mechanisms in their transactions is another sign of their
growing acumen," posits Dr. Mirtchev. "These signs of maturity reinforce
the legitimacy of mergers and acquisitions, and provide an added level of
liquidity to a system that is still struggling to cope with the effects
of the global financial and economic crisis."
About Krull Corporation
Washington, D.C.-based Krull Corp. was founded in 1992 with a mission to
address new economic trends, relevant business strategies, and economic
and political risk mitigation.
Contacts:
Krull Corp.
+1 202 416 1646
+1 202 833 3843
mail@krullcorp.com
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