Back 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.