Is a new M&A boom on its way?
Just a quick one. I leave you with two recent articles (Friday) explaining why M&A activity in the U.S. could be getting back to its 2008 previous levels and where are we heading towards in the next months.
1) DealBook at NY Times: Confidence on Upswing, Mergers Make Comeback
" The mega-merger is back.
For the corporate takeover business, the last half-decade was a fallow period. Wall Street deal makers and chief executives, brought low by the global financial crisis, lacked the confidence to strike the audacious multibillion-dollar acquisitions that had defined previous market booms. Cycles, however, turn, and in the opening weeks of 2013, merger activity has suddenly roared back to life. On Thursday, Berkshire Hathaway, the conglomerate run by Warren E. Buffett, said it had teamed up with Brazilian investors to buy the ketchup maker H. J. Heinz for about $23 billion. And American Airlines and US Airways agreed to merge in a deal valued at $11 billion."
2) Time Business & Money: Mergers and Acquisitions Boom! Is This a Good Sign for the Economy?
"... So why are we only now seeing the first glimmer of an M&A boom?
Surely one reason is that today’s market is heavily fortified by quantitative easing. The Federal Reserve has taken unprecedented action to keep interest rates low in both the short and long term, and those efforts have kept stock prices high despite the weak economy. In other words, given central bank stimulus, a rising stock market isn’t quite the indicator it used to be. We can see this in GDP growth figures as well.
In addition to predicting M&A activity, the stock market is also considered a leading indicator of economic growth, meaning increases in GDP generally follow bull markets. This is because stock prices reflect investors expectations for a company’s future income. A high stock price today represents investors’ belief in big profits tomorrow. Taken in the aggregate, a surging stock market index is a predictor of increases in GDP down the line..."