The M&A Power Shift Continues

eurosBack in December, I noted (and agreed with) one author’s proclamation that in the current economy, the balance of power in M&A has shifted from sellers to buyers.  The main reason:  With the credit market in a crunch, cash is king, and cash-rich companies hold a distinct advantage.

As these survey results show, this trend is continuing.  I believe this is true in the US as well.  Buyers are looking to protect themselves from a sour deal by adding in more escrows and earn-outs, along with more items covered in reps and warranties.  Due diligence has become more thorough.

Good companies are choosing to sit on the sidelines rather than risk a bad deal.  Grade ‘A’ sellers are also waiting for better days, if they can, or aren’t compromising. Cash is king and the king makes the rules.