Watch out for one defensive M&A strategy in times of financial stress. Instead of selling, weaker companies under threat may seek mergers with other victims of the crisis. Expect to see quiet talks between struggling competitors, looking for ways to wring out the costs and create a new, stronger entity.

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A short while ago, banks were pressuring struggling companies and seemed only too eager to move them into the “distressed” category, or effectively force them to sell. Recently, there’s been a dramatic reversal of attitude. The last things banks want on their hands is a host of collapsing companies. So you’ll find a very liberal […]

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I’ve noticed some company buyers willfully slowing down the acquisition process at this time. Why? They smell bankruptcy in the air. The longer they can string out the negotiations, the more desperate the seller’s condition and the lower the price. It’s tough for sellers to defend themselves in this environment. I’ve noticed some company buyers willfully slowing […]

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What I called “the wedge” in my post, The Wedge: M&A from $1B – $10B, is the natural hunting ground of private equity. And this is where we can expect the least activity during a crisis of credit. These buyers hate to put in 100% equity. They like a good measure of debt in the […]

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In every crisis there are winners as well as losers. Today companies seeking growth through acquisition can pick up bargains — if they have the cash. Small, over-leveraged companies are choosing to sell rather than go to the wall. As for the publicly traded corporations, they are under pressure from shareholders to get out of […]

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A common error in the M&A game is to over-delegate the process to the financial team. I had a highly successful client who put an entire acquisition in the hands of his CFO. Like many (but not all) of his kind, this financial executive could only see or understand spreadsheets. He had zero patience for […]

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There is an old way and a new way to go about the M&A process, and it’s essential to know the difference. I had a client that perfectly exemplified the old way. She would be regularly approached by investment bankers hawking “the book” on a company they had for sale. She would listen to the […]

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Much of the buildup that’s been happening over recent years in the residential mortgage market is similar to what has been going on in the commercial market. It’s all about financial engineering. Typically, the financial investor looks at an acquisition and says: “Let’s restructure the balance sheet so that the company doesn’t fundamentally change. We […]

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When the smoke clears and the dust settles, what does the Wall Street meltdown mean? We’re back to cash is king. The Golden Rule has been restored: he who has the gold, makes the rules. It’s a return to old-fashioned investing. Companies with strong balance sheets and lots of cash are moving in to make […]

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