Strategic Buyers Jump Start M&A in 2010

The M&A market continued to rise for the third consecutive quarter, prompting many experts to compare today’s market to 2004. With a significant amount of capital pursuing very few deals, it is truly a seller’s market.

One panelist at last week’s ACG Intergrowth Conference, Lazard’s co-chief executive Mike McFadden, stated “Things have changed so dramatically in the last year.”  More specifically, McFadden indicated “It looks like 2004.” and added that for good companies, “It is very much a sellers’ market…[with] a lot of capital chasing a few deals.”

Most of the deal flow in recent months is coming from strategic buyers who had been boxed out for the past several years. Now, corporate buyers with spare capital are seeking to take over weaker competitors.

These strategic buyers looking to make opportunistic moves are willing to pay large premiums in order to build scale. Increased financing and steadily improving corporate balance sheets have played a large role in the upswing.

The big picture remains bright for 2010 and beyond. Strategic buyers are ready and in search of acquisition opportunities.  For those business owners that thought about selling in 2004-2006 but missed the window, it appears that 2010 may be offering a second-chance.