Confidence on Both Sides of the Table Driving M&A Activity in 2014
A great deal of ink has been spilled expounding on the drivers for the bounce back in the global M&A market that we’ve witnessed so far in 2014.
10 June 2014
A great deal of ink has been spilled expounding on the drivers for the bounce back in the global M&A market that we’ve witnessed so far in 2014. A few of the more popular reasons for the rise in activity include:
- “Mega-deals” are back and are serving as a catalyst for downstream activity
- Corporate buyers are no longer limited to cash; stock as consideration is on the rise
- Financing remains available and affordable
- Gradually easing regulatory environment reducing deal hurdles
The reality is that it’s impossible to point to just one variable in isolation as the key driver; all of the aforementioned points have contributed to the rebound. One of the ‘softer’ elements also cited as an essential ingredient in this equation is CEO and board confidence – it seems the key decision makers are feeling more comfortable loosening their purse strings for acquisitions. We tend to focus on CEO confidence from the buyer’s perspective, but based conversations I’ve had with several Fortune 500 corporate development teams, it seems that this upturn is being fueled not just by active buyers but also active sellers.
Obviously, it takes two to tango for a deal to get done, but over the past few years corporate dealmakers have bemoaned the lack of ‘good’ targets in the market. The so-called ‘good’ targets chose instead to bide their time while equity markets climbed and valuation multiples were in range with their expectations.
CEOs that were previously reluctant to sell are now emboldened by the improved macro conditions and are willing to entertain offers once again. It will be interesting to see how long this confidence lasts – while executive confidence may be a deemed a ‘soft’ factor in dealmaking, its importance in this resurgence shouldn't be overlooked.
As Director of Strategy and Product Marketing, Mr. Collins is responsible for driving the growth of Intralinks’ Corporate Development platform, including the company’s offerings for facilitating both buyside and sellside transactions.