Dealmakers See Silver Lining for 2010
M&A pros see U.S. leverage already rebounding and more aggressive due diligence by buyers
January 26, 2010
Already, market experts are seeing a loosening of credit markets that have been restrictive for more than a year and a growing willingness coming from private equity firms to start buying again.
While investors withdrew from virtually all dealmaking markets with a hiss in late 2008 after the stock market’s crash, that tepidness is beginning to subside, dealmakers told attendees of the Argyle Executive Forum's 2010 Leadership in Corporate Divestitures and Acquisitions Conference.
“Private equity has been put on the sideline” by an inability to finance M&A for about the last 18 months, said David Blumberg, head of strategic development for Iconix, a brand management and licensing company.
PricewaterhouseCoopers transaction services partner Ahmad Shamim told attendees he felt that PE firms will be increasingly likely to pursue corporate divestitures while strategics will try to make the most of debt’s availability in 2010.
And while the deal market’s frothiness is rebounding, the time in which deals are completed will likely not be, several of the conference panelists stated.
“We’re definitely thinking slower,” Blumberg said, explaining that in the recession, both strategic and financial buyers have taken a fine-toothed comb to the due diligence process.
Panelist Stephen Besen, a partner with law firm Shearman & Sterling, said that an “Americanized” style of dealmaking, in which contractual obligations are clarified, and voluminous, and due diligence is applied aggressively, is becoming a global standard.
More leverage has been made available to companies looking to make deals in the U.S. than in Europe, added panelist Mark Copman, vice president of corporate development for 3M. He called the amount of credit available in the U.S. “surprising” given the events that have unfolded over the last 24 months, but stated that he feels most of the new debt issued by banks will be used for strategic buyers.
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