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Breakingviews: M&A doldrums

Thursday, Jan 02, 2014 - 03:17

Jan. 3 - Richard Beales and Jeff Goldfarb discuss why hopes for sharply higher global M&A volume in 2014 may be misplaced.

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Sydney and a new set of horizons for the mergers and acquisitions business as usual. Practitioners investment -- as low as everybody thinks of an improving economy and various other things going well the numbers should finally stopped going up again for global and today. Yet some of them listening Jeff already in winning thirteen. Yet the global volume yeah -- was with knowledge different from the year before and everybody's. Was hoping -- it would be better as the -- this. We had about four years in a row of about the scene volume post writes it's been somewhere around two and a half trillion. At each year we've heard as we always do for the bankers pipeline it's full right you know as a lot of deals in the works and of course a lot of has built around two made -- -- cash. That are on balance sheets right and cheap credit and that's been going on since. For the last few warriors and hasn't been that hasn't been the cattle right. And additionally other things threats and had a couple of new things we had. Deals being rewarded meaning the bias especially this as we go up -- -- -- I was in the future we saw in 2013 and we would've thought that it. Would have gotten -- -- excited because if if you do and he's standard bread and butter deals which is the ones that are getting rewarded with a lot of synergies. Simple business when you already know not a transformational deal. The buyers in Charlotte getting some -- usual -- and as the buyers were getting bigger -- lifts the targets were which is. And clarity and usual right now and now you were also in a position -- the -- -- so it tapering it's a signal really that the US economy. Finally taking alphabet which they speak of the global economy that's it also be a factor -- you -- it didn't -- instinct point annual piece about this. That as a percentage of global GDP he ever activity has been going down because that would. He's had back at some other factors you know bizarre thing that we're stuck -- tends to track stock -- in 2013 you saw them to wipe away. Stocks went up and and didn't see -- -- big gap Sosa a little bit out there to -- and -- out get a spring event I don't you'll you'll -- cautiously deficits -- -- despite all. That's the you know I'm a big believer in inertia and I think that you know you've had for years. And what has settled in in two boards in particular but also CEOs this idea that. Let's not do anything that's too crazy or run they're worried they're cautious right wanna reserve the cast. They don't wanna do transformational deal the ones that have been done have been punished either by regulators. -- -- on capitol Laporte deals not just in the US but in European and other jurisdictions. That activists really jump into these emanate transactions. And and push and they they they hold the market which for a few cents or dollars. We saw in -- Associated in some others -- that the CEOs are kind of thing looking at that activists have grown in popularity. And really so when there's an activist with stock. It gently push for cash back not reverend -- transactional so that's another factor but -- I think that that mindset has really taken hold since the crisis. And for that reason I don't think we're gonna see huge jump and evidently people -- open. But it Jeff will leave at that. We have more predictions from breaking music and -- live from breaking and we'll have what Britain is elevated to you next week.

Breakingviews: M&A doldrums

Thursday, Jan 02, 2014 - 03:17

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