A few weeks ago I read an interesting article in Mergers and Acquisition magazine, a publication of the Association for Corporate Growth. Entitled “2013 Could See an M&A Resurgence,” it was written by Frank Aquila, co-head of Sullivan & Cromwell’s general practice group. Around the same time the article was published, Mr. Aquila was also interviewed by Axialmarket and the topic, not surprisingly, was his view on M&A news in 2013. You can see the entire interview by clicking here.
In both the written article and the interview, Mr. Aquila does a great job of presenting the facts relating to M&A news in the coming months. And he does so in a very even way. In fact, in the written piece, he lays out two scenarios: a worst case and best case, if you will.
In his opinion, the worst-case scenario would have actually started at the end of last year if the president and Congress had not agreed on taxes going forward and if the Eurozone’s debt problems had worsened. From his perspective, we began to avoid the worst case with an agreement on taxes and the stabilization of Europe's economy.
As for the best case outlook, this is how Mr. Aquila put it:
“Since the fiscal cliff was largely avoided thanks to the eleventh-hour passage of the American Taxpayer Relief Act of 2012, we’re closer to the best case scenario.”
We agree with Mr. Aquila. It seems that many of the unknowns we were facing in 2012 have been cleared up to some extent. The only real unknown in the U.S. is the short-term (or long-term) impact of sequestration.
Economists agree that if nothing happens in Congress and full sequestration is allowed to occur, it will have a negative impact on the economy. How deep and how long this will last is the unknown.
And, of course, Congress can always retroactively act to clean sequestration up. Mr. Aquila and most dealmakers expect Congress will eventually act to stave off the worst impacts of sequestration, at least for the shorter term, which will have a positive impact on M&A activity.
Of course none of this really matters unless you are a defense subcontractor that may see your business directly impacted. Even so, again, no one is quite sure what that impact will look like.
For the rest of you, if you are at a point in your life where monetizing your largest asset makes sense, 2013 could be a great year to do so. As we have discussed, the M&A fundamentals are sound, there is significant pent-up demand for acquisitions, and the U.S. market continues to be the most stable economy in the world.
If you would like to learn more about why we consider 2013 to be a great year to find optimal buyers, I invite you to a Generational Equity M&A seminar. While there you will be able to have one-on-one conversations with our representatives and confidentially discuss your situation.
If you would like to learn more, provide us with your contact info and we will be in touch. Or call us at 877-213-1792 and we will answer any questions you may have.
And special thanks to Mr. Aquila for laying out such a good overview of M&A news for 2013 and beyond.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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