Why deals happen or don’t happen

In Uncategorized on 17/10/2010 at 4:59 am

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]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: