Last year was a record year for mergers and acquisitions but is that about to change?

Is the bubble about to burst? There are some signs……

Also, how are you affected as a small business owner?

If you want to sell your business and maximize your exit after many years of hard work and risk, should you be worried?

According to Dealogic, 2015 was a record year with $4.8 trillion worth of deals exceeding the high of 2007 [$4.6 trillion].

Easy money, hunger for market share and increasingly open borders for global business were the driving factors for the increased mergers and acquisitions activity.

So what has changed?

You may have noticed that some of the 2015’s megadeals are unravelling and won’t complete.

The Pfizer – Allergan merger, which would have been worth $160 billion, was officially called off this week after the US Treasury announced new rules clamping down on so called ‘tax inversions’.

In addition, the proposed merger of Halliburton and Baker Hughes is also at risk as the US Department of Justice has filed an antitrust lawsuit to block the merger.

These 2 transactions illustrate the potential ‘new world’ and the risks associated with high level mergers and acquisitions.

There was a 20% decline in takeover activity in the first quarter compared to last year.

Furthermore, regulators are flexing their muscles to block transactions that have already been announced that involve reducing taxes or competition.

There are 2 potential factors stifling the mergers and acquisitions activity:

1.    New rules around ‘inversions’

Inversions are where US companies merge with competitors outside the US so they can adopt the other country’s lower corporate tax rate.

According to Goldman Sachs, these kind of transactions have made up between 4%-5% of the total mergers and acquisitions activity over the last few years.

The Pfizer – Allergan deal isn’t the only deal that will be affected….there are plenty other deals in the pipeline that will potentially unravel.

2.    Concerns around national security

In a previous blog [23rd March] entitled ‘Which country has become the most aggressive buyer of businesses?’, I highlighted the increasing dominance of Chinese companies in the global mergers and acquisitions arena.

This has got the US politicians nervous and they are ‘reviewing’ a number of deals.


This is interesting but what is the relevance to the average small business owner?

Will these ‘new’ factors have any impact on you as a small business owner who wants to maximize your exit?

It’s unlikely.

The overall fundamentals still remain the same…..reasonable economic growth and cheap money.

Sentiment still remains positive.

These ‘new’ factors will have an impact but only at the very highest level….multi-billion dollar deals.

The deal size range for small businesses – $1million, $5million….even $10milion and beyond will not be affected.

If you are going to sell your business this year, or in the near future, so you can maximize your exit and achieve the payout you deserve, you, however must remain vigilant of the general business environment.

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