Friday, April 16, 2010
Although we have seen a number of M&A deals announced in recent months, there is good reason to believe that we could see many more transactions during the rest of the year.
This in turn could boost overall stock prices, as investors see deal flow as a sign that corporate America believes that company prices in the public market are trading below intrinsic value.
This morning's Wall Street Journal has a short article about this subject in it's "Deal Journal" column. I have attached the full link, but here are the four main reasons the article cites for a possible increase in M&A:
1. Easy access to capital and low cost of capital;
2. Corporate America is awash with cash;
3. The rise in stock prices over the past year means more sellers may believe that they can get fair value for their companies;
4. CEO's looking for more growth may find it in other companies instead of internal initiatives.
J.P. Morgan’s Braunstein: ‘Optimism Is Back!’ So, Ahh, Where Are the Deals? - Deal Journal - WSJ