Light On The Horizon For M&A

Dark times on Wall Street and gloom in the real economy… but for companies seeking external growth there are gleams of hope from distant quarters. Funds continue to pour into the US from abroad. I just spent time with an economic development group hosting a contingent of matchmakers from China — entrepreneurial types looking for the hot areas here in the US. Healthcare, medical technology, food, capital equipment… All these are getting attention for potential courtships. 

The influx of cash was first stimulated, of course, by a weak dollar but now the greenback has leveled off there is still plenty of interest from overseas. Why? Troubled times are rich in bargains, and cash-rich buyers can smell them from far away.

The opportunity street is not one-way, however — particularly for US companies ready to think outside the box. Obviously, troubled firms can gain liquidity by selling, but that’s not the only option. 

It’s a common misconception that the world of M&A is neatly divided between buying and selling. In reality, there are many shades between and this is where the gold may lie for American companies. Take the trouble to research, and court, some of those hungry visitors to our shores and you’ll find opportunities for all kinds of other deals, like marketing partnerships, JVs or minority investments. 

Rather than throw in the towel and sell, you could use foreign money as leverage for external growth.

This post was contributed by Capstone’s Managing Director, John Dearing