M&As: A New Guidelines Draft

Posted on October 27, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

http://www.MARCINKOASSOCIATES.com

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Last month, the FTC and DOJ jointly released a draft of new guidelines they will use to evaluate potential mergers and acquisitions (M&As).

The guidelines include 13 principles the agencies will follow when scrutinizing deals. The principles stipulate that mergers may not “entrench or extend a dominant position,” eliminate competition between firms, increase concentration in an already concentrated market, or prevent new players from entering a market. The guidelines will be finalized following a 60-day public comment period.

The proposed rules reflect a return to pre-2010 guidelines on concentration, the Wall Street Journal reported, noting that they’d apply to deals that resulted in firms having a market share of 30% or more. The new guidance may give the FTC and DOJ, which have filed numerous antitrust actions, more leeway to go after deals.

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KING IS CASH: In a Tough Interest Rate Ecosystem

Posted on July 19, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Cash is king, especially in this tough interest rate environment. That’s proving true in the mergers and acquisitions market this year, according to PwC’s US Deals 2023 midyear outlook, which says companies and private equity with cash in hand are making deals happen. There are “opportunities for corporates with strong balance sheets. Private equity sponsors with large amounts of dry powder also have been getting deals done,” according to PwC.

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Deal makers need cash because lending has become tougher and more expensive to obtain. Additionally, “the IPO market has remained quiet for over a year.”

Even the private equity market, which often leans heavily on debt financing, is reaching for other ways to get deals done: “Some PE sponsors have turned to more creative financing solutions, including higher equity contribution, seller’s notes, paid in-kind financing and the private credit markets.”

The challenging market is also impacting deal size. PwC found that deal makers are eschewing big deals in favor of smaller opportunities. However, although the deals appear to be smaller, the volume of M&A activity is “relatively strong compared to” COVID pre-pandemic levels.

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