As M and A Slumber, Activists Keep Right on Rolling

company mergers consultant berkshire

It's no secret that mergers and acquisitions in Britain have been on a holiday for several years now. As an M&A consultant, I can tell you that it is been a long time since I've seen the level of activity (or lack thereof) we've witnessed since 2012. Mergers and acquisitions are just not what they could or should be right now. Unfortunately, activist investors keep rolling along while the M&A market seems to be sleeping.

Mergers and acquisitions are not on life support by any means. However, they aren't exploding all over the British economy either. The level of M&A activity in recent years has been so limited that the Evening Standard's Jim Armitage recently wrote an article about a new generation of young bankers who have never completed an M&A deal.

Armitage explains how twenty-somethings just starting out in the corporate banking world have completed all their education and on-the-job training in anticipation of landing that first deal. They sit around for years waiting, and the deals never come. Armitage specifically mentioned one competent banker who had been with a large institution for more than three years without ever completing a deal.

Great Opportunities for Activists

The low volume of mergers and acquisitions may not be good for large commercial banks, but it is good for activist investors and corporate raiders. And make no mistake, they are alive and well throughout the global corporate community. Activists are looking at every possible opportunity to advance their own interests while mergers and acquisitions are taking a rest.

According to Armitage, there are roughly 52 British companies currently vulnerable to activists and raiders. That makes Britain the leader for hostile activity in Europe. Activists are targeting consumer-orientated companies whose stock performance has suffered in recent months in the hope of getting in low and making a big profit when it's time to sell.

As an M&A consultant, I constantly have to evaluate whether giving in to an activist investor is in the company's best interests. Reaching a conclusion in any given case is a lot easier said than done. No business acquisition consultant can know for sure what the intentions of an activist or raider really are. We can assume to know based on history, but there's no way to know the future until it finally arrives.

Unfortunately, activist investors and corporate raiders have a reputation for focusing only on their own pockets and the amount of money that lines them. They may look for ways to improve a company they have invested in, but how concerned will they be with the health of that company after selling their own shares?

The M&A market in Britain has been soft for quite a few years now. And while mergers and acquisitions take a rest, activists and raiders are doing what they do. It is even more reason for companies to shore up their operations so they do not become targets of the wrong crowd.

Sources:

The Standard – http://www.standard.co.uk/business/jim-armitage-the-generation-of-bankers-who-have-never-done-a-deal-a3590556.html

Send Growth through acquisition an Email
Profile picture of Tim Luscombe

Author: Tim Luscombe

Hello, I'm Tim and I'm a specialist in corporate finance for the owner managed business. If you've been approached to sell your business, or you are thinking of buying a business or you just want to know what your business ...


Leave a Comment?