MERGERS AND ACQUISITIONS(M&A)
Dealmakers predict an up tick in mergers and acquisitions (M&A) in the year 2010. According to a survey by the Association for Corporate Growth, corporate and dealmakers anticipate an increase in M&A this year. The manufacturing, financial services and health care sector are expected to lead the way.
The latest data suggests that during year 2010, 642 acquisitions worth $32billion has been announced by U.S. companies for targeted assets within the USA and around the world.
There are several different thoughts regarding M&A. However according to my opinion, many companies are still trading below their intrinsic value. In other words, it is “cheaper” to buy an existing company then to establish a new company from scratch in the same business. Today there are many cash rich companies. In order to grow their business, a buyer prefers to buy a “cheap” company with a bright future, offering a buyer excellent opportunities.
In conclusion the next few years, we will see an increase in M&A. Companies will be sold at a premium to their current stock prices. The acquired company will free up dollars in order for investors to purchase stocks of other companies.