M&A focus to change in 2009

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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.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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