Merger Cycle / Waves - M & A review series 2
2021 M & A market: Seller's market
It's pretty clear based on not only my personal experience but others.
"the interplay of several key factors: low interest rates, abundant capital in search of targets, larger companies seeking to grow and diversify through acquisitions, aging baby-boomer business owners ready to exit, and optimism for an economic landscape improving with the rollout of COVID-19 vaccines."
-"M&A Outlook for 2021: An Active Seller’s Market" Robert Murphy, Senior Managing Director, PKF O'Connor Davies Capital, LLC
Merger Cycle or Merger Wave
When there is a rise, a fall will follow. It's a proven law. The law applies to M & A market as well. I used to call this as Merger Cycle. Others (MS, WE, SJ) name this "Merger Waves."
Three Mistakes in Merger Waves
When the huge waves come, a surfer duck dives waiting for the one they can ride. If a reckless surfer tries to ride the wave beyond their capacity, they are destined to fall with the wound.
Likewise, merger waves vary, the players need to check whether they can ride the coming waves. Deloitte's article introduces three common mistakes in riding merger waves.
"While the reasons behind these merger waves vary, there are several common mistakes that acquiring companies often make during them."
1. having an undefined growth strategy
2. Overpaying as deal volume escalates
3. lack of options
Discipline and Patience
Also, they introduce some action plans, which are quite worthwhile to think about. Let's drop your keyboard down and think about this.
Are we looking at the right deals?
Have we measured the transaction's potential impact on ourselves—and our competitors?
Do we have the appropriate integration capabilities?
What can we walk away to?
Build a reputation as an "acquirer of choice."
An Excerpt of Conversation (includes informal expression)
Kim Daoshi: Hey, Youbin, tell me your view on this article.
喩彬 (Youbin): Hey, Daoshi, don't call me 喩彬 (Youbin).
Kim Daoshi: Why?
喩彬 (Youbin): It makes me arrogant. It's the most brutal enemy of logic.
Kim Daoshi: Then I will call you another 有貧(Youbin). It means "Hunger be with you."
喩彬 (Youbin): What?
Kim Daoshi: Hunger needs an object. In your case "hunger for logic." How about that?
有貧(Youbin): Wow, it satisfies me. Thanks. You have a talent for making a name.
Kim Daoshi: Now criticize my article.
有貧(Youbin): It's nothing more than introducing Deloitte's article. I can't find your view.
Kim Daoshi: His view happened to be the same as mine. Thus it's my view as well. My theory was Merger Cycle and theirs was Merger Waves.
有貧(Youbin): Non-sense. Please use your story, not others. This article does not fall under the category of the article. It's just a summary or extract of an introduction to another's article.
Kim Daoshi: Wow. You are my genuine friend. This is why I can't unlike you. You will see my story next time.
Coming soon - "Overpaying" - Are you an Opportunity Seeker or a Commitment Keeper?