B&E & IIPM Think Tank present the M&A update 2011-12, Including a Primer on M&As across The Globe this year and analysis on Major Sectors of India that are ripe for M&A
The fact is that whether M&As are used for survival or for growth, they’ll remain one of the most glamorous strategies a CEO could ever employ.
And to that extent, it has been an interesting first half of the year 2011, which just about took us through everything the world (read: corporate) has been through over the last 3-4 years. From prosperity at the bourses, to shareholders suddenly crying out for mercy; from an economic boom to a devastating recession, the world has been through a roller-coaster ride all these years. Needless to say, the scenario had also affected the appetite for mergers & acquisitions (M&As) across the globe. After all, investor sentiment, consumer demand, and most importantly financing was simply not there for deals to happen. But, as US corporate profits reach 60-year highs and global economies start accelerating, M&As are definitely coming back with a bang. In fact, financial investors have already started flexing their muscles as new capital starts flowing in their funds. But is the corporate world ready for consolidation – across geographies, across industries – once again? And if yes, which sectors are ripe for consolidation? Or, are these moves by companies just add-on efforts to stay relevant amidst yet another recession (a double dip) that has not only started haunting the US, but also several economies across the euro zone and is also giving sleepless nights to the world at large?
The numbers look stunning. Global M&A deal value reached $1.16 trillion in the first half of this year, registering a 27.9% increase from last year levels. Although the deal volume was down by 2.7%, from 5,843 announced deals in H1 2010 to 5,684 announced deals in H1 2011, the ongoing trend suggests that while the larger, cash-rich buyers are prepared to spend, their smaller counterparts are playing a waiting game, sceptical of making commitments in an uncertain economic climate. But despite the dip in the volume of deals, there’s potentially good news on the supply side, as previously frustrated sellers recognise that the market is now open for business – even if it is not quite as hot as they would like. These sellers include private equity (PE) players, which need to sell assets (which they have been holding for long) in order to move forward. In fact, the first half of 2011 was the busiest six-month period since H1 2008 with closed deals worth $1,266.1 billion. While the largest deal so far this year is Deutsche Telecom’s $39 billion disposal of T-Mobile USA to AT&T (the largest corporate deal since ExxonMobil’s $40.6 billion acquisition of XTO Energy in December 2009), Johnson & Johnson’s $21.2 billion acquisition of Switzerland-based Synthes GmbH stood a distant second. Even cross-border M&As saw the busiest six months since 2008. Deals by individual countries announced in the first half of 2011 added up to $468.1 billion; registering a whopping 53.3% increase since H1 2010.
And to that extent, it has been an interesting first half of the year 2011, which just about took us through everything the world (read: corporate) has been through over the last 3-4 years. From prosperity at the bourses, to shareholders suddenly crying out for mercy; from an economic boom to a devastating recession, the world has been through a roller-coaster ride all these years. Needless to say, the scenario had also affected the appetite for mergers & acquisitions (M&As) across the globe. After all, investor sentiment, consumer demand, and most importantly financing was simply not there for deals to happen. But, as US corporate profits reach 60-year highs and global economies start accelerating, M&As are definitely coming back with a bang. In fact, financial investors have already started flexing their muscles as new capital starts flowing in their funds. But is the corporate world ready for consolidation – across geographies, across industries – once again? And if yes, which sectors are ripe for consolidation? Or, are these moves by companies just add-on efforts to stay relevant amidst yet another recession (a double dip) that has not only started haunting the US, but also several economies across the euro zone and is also giving sleepless nights to the world at large?
The numbers look stunning. Global M&A deal value reached $1.16 trillion in the first half of this year, registering a 27.9% increase from last year levels. Although the deal volume was down by 2.7%, from 5,843 announced deals in H1 2010 to 5,684 announced deals in H1 2011, the ongoing trend suggests that while the larger, cash-rich buyers are prepared to spend, their smaller counterparts are playing a waiting game, sceptical of making commitments in an uncertain economic climate. But despite the dip in the volume of deals, there’s potentially good news on the supply side, as previously frustrated sellers recognise that the market is now open for business – even if it is not quite as hot as they would like. These sellers include private equity (PE) players, which need to sell assets (which they have been holding for long) in order to move forward. In fact, the first half of 2011 was the busiest six-month period since H1 2008 with closed deals worth $1,266.1 billion. While the largest deal so far this year is Deutsche Telecom’s $39 billion disposal of T-Mobile USA to AT&T (the largest corporate deal since ExxonMobil’s $40.6 billion acquisition of XTO Energy in December 2009), Johnson & Johnson’s $21.2 billion acquisition of Switzerland-based Synthes GmbH stood a distant second. Even cross-border M&As saw the busiest six months since 2008. Deals by individual countries announced in the first half of 2011 added up to $468.1 billion; registering a whopping 53.3% increase since H1 2010.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
