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Norbert
seabird
08-05-2007, 6:05 PM | Post #2422121
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Wasn't at least part of the recent equity price run-up made possible by very cheap credit that created a M&A and Private Equity boom?
I don't know how to quantify it, but a lot of the M&A was done by companies brimming with cash. They didn't need to finance the M&As. But the press played up the leveraged buyouts by private equity firms because they tended to be the "blockbusters".
During every conference call, the CEO of one of my stocks talks enthusiastically about acquisitions. They haven't reported earnings yet, but it will be interesting to see if he's still enthusiastic. I believe he will be. He has plenty of cash, and now there are tons of companies to be had at bargain-basement prices!
There's no denying that the credit crunch is serious, but that doesn't affect the companies that do have the cash to support continuing acquisitions and buybacks. That's not going to change. What's going to change is that private equity will be less of a player in the game - except for the biggest private equity firms. But analysts were citing M&A and buybacks as a factor in the rising stock market even before private equity got into the game.
Originally posted in thread: 9117
Topics
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