As the recession period draws to a close, some analysts are wondering if it will spell the start of a particularly busy period for mergers and acquisitions.
Following a time when firms were tightening their purse strings, those companies that have managed to successfully strengthen their balance sheets may now be looking to find a bargain.
Bankers claim that M&A is an attractive route to take in the post-recession period as previously unattainable firms could now be well within the reach of those who want to buy them.
Indeed, many businesses are set to sell off assets in a bid to reduce leverage, meaning there could be an influx of businesses for sale, particularly within the financial services sector. This rush to sell assets is being partly prompted by financial institutions finding themselves in debt to the Government after the round of recession bailouts.
Although some experts urge caution in purchasing distressed business, as creating successful recovery is a challenge for buyers, these types of acquisitions can offer some of the best value deals around and are plentiful following a recession.
Smaller firms are also set for a busy year in terms of M&A, as a result of the gap between the expected value of assets and the achievable sale price narrowing.
Thierry D'Argent from Societe Generale said, "companies may not be willing to sell at today's valuations, but there is a premium to repairing balance sheets, having a strong credit rating or indeed restoring the ability to seize opportunities."
Another factor that may boost the number of mergers and acquisitions is the re-emergence of the availability of bank debt. As a result, private equity firms are expected to begin to take a more active part in helping firms to restructure.
Business owners were putting off the sale of their assets during the downturn, as they were simply not worth enough. However, as the market stabilises, values are up once more but, crucially, there are bargains still to be had for eager buyers with money to spend.
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