The recession will have a major impact on M&A activity next year, according to a new analysis by Pilko & Co. Their key conclusions are:
• Increasingly,deals will be the result of financial restructurings, workouts or bankruptcies.
• Buyers with cash and debt capacity will be able to dictate terms.
• Asian/Middle East buyers will dominate, as they can still obtain funding, and have a longer-term approach.
In the boom years, too many deals were based on a view that any purchase price was acceptable, as long as sufficient debt could be found to leverage the earnings of the acquired company. 2009 will see the painful process of unwinding this fallacy get underway.