‘Green shoots’ in Global M&A
It seems that you can’t read the business new these days without hearing about the ‘green shoots’ in the economy and whether the recession (or depression, if you happen to be someone losing your job) is going to be over soon. Back in the springtime, Federal Reserve Board Chairman Paul Bernanke started seeing these ‘green shoots’, and President Barack Obama talked about ‘glimmers of hope’. Check out this article from Bloomberg that talks about one of the growth industries of 2009 being the use of the term ‘green shoots’!
There are doubters about the economy, of course. Lots. But one can’t deny that the stock markets have at least improved since the Springtime, and with it business confidence for many industries.
But how about M&A. I am talking to dealmakers, journalists and advisors daily in the M&A arena. And here it’s a mixed bag as well. But ‘green shoots’?
First the facts. It’s been widely reported that the first half of 2009 was the worst in ages (five years by most people’s count) for M&A deal volumes. The mainstream news even reported this, whereas they usually don’t report about M&A deal volumes at all (see the Fox News coverage here as an example of one new channel’s reporting last month). As for July? Check out the excellent Wall Street Journal Deal Journal blog on July volumes being a new low. So any springtime M&A green shoots seem to have withered in the summer heat.
Or have they?
Not that I want to be seen as being overly optimistic, but I think the sentiment in the market is stronger than the July and August figures show (yes, August won’t set any volume records on the high side either, it seems). Dig deeper. Not green shoots, but strong roots. More industries being active (not just pharmaceuticals and extractive industries as earlier in the year with the high-profile mega deals, but activity now in the technology sector, professional services, retail, industrials, energy and telecoms). M&A advisors are busier — and not just with post-merger integration work from deals closed in 2007 and 2008 (which was much of the activity earlier in 2009). Even the airlines serving businessmen and businesswomen are seeing upticks in traffic.
It’s happening. Bernanke and Obama may have prematurely called the end of the downturn in the M&A market (and in all fairness to them, they were talking about the overall economy, and not the M&A market), but now it may finally be true.
I’d be interested in hearing if others share the feeling…
Intelligent Mergers 
The recent market run-up is a Generational Ponzi Scheme. Bernanke pushed 2 trillion in TARP funds, borrowed from future generations, over to the banks, and the banks are laundering it through the back door of the market.
There are no fundamentals that would indicate the market should be this high – revenues are way down across the board, companies have only been achieving “better than expected” earnings through layoffs! Making themselves look better on paper – by shrinking.
Bernanke engineered a ponzi scheme. A shell-game with borrowed funds over to the banks, then they shell-game it into the market. Then a rising market would cause people to do the very thing you did in your post – pronounce the market a result of “green shoots.” This would then get the consumer to start opening the wallet.
But the consumer is tapped out, and earnings are in the toilet, and Bernanke is no more than a two-bit ponzi schemer. Time is up on his little charade.
Glenn Atias
Monday, 17 August 2009