What’s holding back deals? According to Mr. Leon Black from private equity firm Apollo Management. , three reasons:
- The prices seem too high
- The financing isn’t attractive enough
- There’s still an unstable economic environment*
“All these things factor in,” he told reporters.
The converse would need happen for deals to happen.
*And the mood has switched from positive to negative in six mths. Today’s FT reports Some of the world’s top business leaders are reversing plans for mergers and acquisitions due to a sharp deterioration in confidence over the past month amid fears of the uncertain macroeconomic outlook.
Austerity measures, increasing taxes, currency conflicts and regulatory concerns, among other issues, are undermining confidence in the global economy and reducing appetite for M&A, in spite of improved funding availability.
A number of mooted deals have collapsed in the past week. On Friday, HSBC, Europe’s biggest bank, ended talks to buy a £5bn ($7.3bn) majority stake in South Africa’s Nedbank, while attempts by Sinochem of China to put together a rival bid for Potash are faltering . [Update on 18 Oct]