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September 19, 2007Delaying the Inevitable?
For anyone following the mortgage meltdown and subsequent market turmoil that has followed, it has not been a question of if the Federal Reserve would get involved, but rather when. And on September 18, we got our answer, as the Fed cut the federal funds rate by 50 basis points in an effort to lessen the impact of a poor housing market on the rest of the economy. So, like a good parent the Fed stepped in to bail out the hedge funds and sub-prime lenders largely to blame for the current situation in the first place.
September 16, 2007Land of Opportunity
With the winding down of the global mergers and acquisition boom, which began in 2003, many investors are wondering where the new market opportunities may lie. The recent credit crunch has choked off the easy credit that had been fueling the buyouts for years. In fact, through June 2007, M&A activity, as measured by total transactions volume, had been at an all time high. However, the recent liquidity issues have already begun to slow the number of acquisitions and even thwart some deals that were previously in the works. According to the market research from Dealogic, in August there were about $222 billion worth of deals around the globe, the lowest monthly total since July 2005 and considerably lower than the $695 billion figure struck in April and the $579 billion in July. While it is unlikely that there will be a quick rebound in the credit markets, it is even more unlikely the deals will dry up altogether. So, who will benefit from the tighter credit markets and lower deal prices?
September 08, 2007I just completed a deal - now what?
Over the past six months we have had several emerging companies complete acquisitions in this heated M&A market. In most instances it's not just one deal, but successive deals of a similar nature in a short amount of time. As a result, these clients are terribly busy with the integration of new facilities, assets, employees etc. Accounting and taxes are not always the top priority and usually the accounting team starts to fall behind. Why? Well, often companies underestimate the financial integration issues, including the work that needs to be done by their current audit teams on the new assets. Secondly, acquisitions are rarely scheduled. In other words, the auditors, bankers, valuation professionals etc., don't have the acquisition built into their capacity and may have to "fit it in" with normal recurring projects. Which means, that acquisitive companies can fall behind on reporting. The good news from the valuation front is that the two most common post deal requirements that companies generally face do have synergies if managed appropriately.
