Mergers and acquisitions come in waves. We are in one of those waves.
Trying to sell at the point where buyers are paying over the odds is a good strategy.
Today there is an excess of liquidity in the USA, Asia and Europe and easy access to cheap debt for anyone asking for loans or credits. This has resulted in an increase in the price of assets and stocks, which has created a general feeling of M&A possibilities.
Having money and access to cheap credit means that companies are willing to get into debt in order to buy other businesses, reaching record highs of acquisitions.
Access to credit plays an important role as a catalyst for corporate transactions.
The possibility to get debt cheaply due to low interest rates results in more corporate transactions.
Stock markets are at their highest. When companies are worth more they can also buy companies at higher prices by paying in shares. Overvalued stocks are then exchanged for undervalued securities or assets. This happens mainly when companies trade at higher multiples in the stock market.
We are witnessing and increate in M&A activity and reported valuations are trending above anyone´s expectations.
If you are ponder the possibility of selling your company in the near future, consider ramping up your exit schedule to fast-track your plans.
To sell a company takes time. Don’t be too late.
Don´t forget that today negative interest rates everywhere sings a global economic malaise on the forecast and that malaise is likely to affect us all for the decade to come.
Article written by Enrique Quemada.
