Opportune LLP Talks 'Top M&A Targets in 2017' to U.S. News & World Report
Mergers and acquisitions have hit breakneck speed and the outlook remains strong for investors.By Lou Carlozo, U.S. News & World Report | Commentary by John Vanderhider, Partner & Corporate Finance Expert
[caption id="attachment_11107" align="aligncenter" width="640"] Investors should watch for companies such as General Mills, Groupon or Sirius XM Holdings to get snatched up. (SPENCER PLATT/GETTY IMAGES)[/caption]
One way to think of mergers and acquisitions invokes traditional metrics and flow-chart precision: Two companies meet, discuss, crunch the numbers and hopefully emerge as a stronger unit the moment they join forces, or one buys the other.
But in the early weeks of 2017, there's another paradigm in play – one where sugared-up investors reach for the proverbial candy bowl where M&As might as well be sweet as M&Ms.
"The U.S. economy is ripe for M&A in 2017," says Dan Shea, managing director and head of private equity coverage with BDO Capital Advisors. "The three pillars of capital formation – private equity funds, corporations and lending institutions – are all flush with cash and eager to transact."
As for whether those pillars stand ready to raise the roof on an investment bonanza, it remains to be seen whether suitors and targets can beat the clock.
Steven M. Dresner, president of Dresner Partners Investment Banking and vice chairman of IMAP, concurs that "2017 will be a strong year for M&A" – but due to economic pressure as much as anything else.
"Rates are still low and there is threat that they will rise," Dresner says. "This puts a sense of urgency on buyers and sellers of companies alike, and there will be a push to get deals done."
Looking for some strong candidates to get snatched up? "Groupon (ticker: GRPN) is clearly one," he says. "The company continues to grow, improve and yet disappoint."
Others Dresner cites include Sirius XM Holdings (SIRI), a money loser but with dominant market share and awash in rumors that billionaire Warren Buffett is sniffing around. And: "All of the food packaging companies are up for grabs, including Kellogg (K), General Mills (GIS) and Mondolez (MDLZ)," the last of which ended a failed play in August for the private confectioner Hershey.
"I think the key to successful M&A investing is to initially identify those sectors where further consolidation is anticipated and earnings are projected to grow," says John Vanderhider, partner in the Corporate Finance Group at Opportune. "Identify industry leaders and/or companies that have a unique competitive advantage, be it a product or service that truly distinguishes their company from the peer group."
And if investors need that kind of granular focus, it turns out companies on the M&A prowl will as well...Click below to read the full article.