The Trends that Define M&A

When we do webinars that wrap up one year and look forward to the next, they always include a component of looking at the trends that have carried M&A and whether we expect them to continue. The new year has rolled around, and as usual, we took the time to look at the trends that defined M&A for 2012, and whether they will continue. Thankfully, as things continue to build and improve financially, it looks like we can largely rely on these trends to continue.

Here are our top ten trends from M&A that are bridging 2012 and 2013:

  1. Extraordinary disruptive changes and interrelated mega trends. We believe this is going to continue, and well be offering special reports on these trends throughout the year.
  2. Strategic buyers still have record cash. They have even more than they did a year ago.
  3. Debt is at the lowest cost ever, averaging one dollar per ten. And it looks like its going to stay that way for a while.
  4. Private equity has more than $1 trillion available to them, almost three times what the strategic buyers have. And, with the low cost of debt, PEs will do more leveraged deals. Look for a special presentation from us next month featuring private equity.
  5. The new public buyers are foreign companies and we envision this continuing. Youll hear this more and more, especially about Asian buyers.
  6. Non-tech buyers are entering the market. A lot of mainstream companies need tech embedded in their products. Well continue seeing this with firms like Bosch in the coming year.
  7. Crowdfunding was a term we used for funding companies over the Internet. Now with the JOBS Act there is a new way of funding sanctioned by the SEC. We think this will have a positive impact on funding tech companies, however, the rules are still in limbo.
  8. American companies are still cheap for foreign investors because the dollar really hasnt changed, remaining right around $1.30 to the Euro.
  9. Many large US companies have a majority their cash overseas, including more than 70% of tech companies. With the present administration, its likely to stay that way and will continue to drive international M&A.
  10. Finally, software is rising in importance among large tech players due to its high margins. This trend is continuing.
Posted by , Chairman on 25 January 2013
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