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Print Edition StoriesWednesday, September 1, 2010
The List
Investment banks with the top 20 M&A deals
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Click for a PDF file of the Investment banks with largest M&As
Cheer up, hopeful buyers and sellers, because the mergers and acquisitions market is starting to improve, according to Peter Alternative, a partner at Mirus Capital Advisors Inc. in Burlington. After a slump early in 2010, the market is making a comeback in Q3, he said.
Last year, there was a spike of distress deals as companies in financial trouble were acquired, but the predicted windfall of distress deals never materialized, said Alternative. This year, the number of such deals is down, and Alternative asserts that things are getting better. Banks are becoming looser with lending, he notes, although the terms are not as nice as they were before the economy headed south.
Alternative remains cautiously optimistic. The quality of the companies available for sale is strong, and there are a lot more buyers now, he said. Another change he predicts involves the valuation gap, the difference between what a company expects it will sell for and the actual purchase price, which has been wide for the past 18 months. He expects that gap to shrink.
According to Alternative, 90 percent of the M&A transactions are being driven by strategic buyers. This year, companies are transitioning from cost-cutting measures to growth opportunities, and for many, Alternative said, M&A is the way to go. Ultimately, said Alternative, corporations need to be agile and act quickly in their growth strategies.
Alternative cites Google Inc.’s recent purchase of Slide Inc., a maker of social media widgets, as an example of strategic growth through acquisition. “It’s quicker for them to buy the technology than to build it,” said Alternative.
In the technology sector, Alternative sees more “tuck-in” deals than transformative ones. Tuck-in deals are less risky, he said, because less money is at stake and the company doesn’t have to adjust to a new market.
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