January 11, 2016

Market predictions for 2016

There are many predictions for major company mergers in 2016, some of which include Apple and Google.

Each year, the editors at Fortune magazine come together to create the "Fortune Crystal Ball," where they analyze market trends and a variety of other factors to determine the most likely predicted list of company mergers and trends to occur in the following year. While their predictions are not foolproof, they are possibilities certainly worth exploring.

One of the top possible mergers on Fortune's list is between Apple and Tesla. Apple has previously announced its plans to construct an entirely electric car by 2019. Should the company decide to purchase Tesla, with its existing technology, this faraway date could be dramatically moved up.

"With over $200 billion cash on hand, the iPhone-maker has more-than ample resources to absorb the purchase, especially now that some of the bloom has come off Tesla's once-rosy stock," Aaron Task wrote at Fortune. "In addition to its automobile know-how, Apple gets access to Tesla's battery technology, which CEO Elon Musk claims can help change 'the entire energy infrastructure of the world.'"

Meanwhile, Jeremy Owens at MarketWatch predicted that Google might seek to acquire an array of organizations over the coming year. Since the inception of Alphabet Inc., the multinational conglomerate created last year as a parent company to Google and its affiliates, many analysts see this strategic move as a way for Google to add new innovative companies under the Alphabet name.

The question remains as to whether Alphabet will seek to invest in younger or flashier startups, like Twitter, or companies that will provide measurable sales and revenue boosts, like driverless cars. The course of action depends on the audience the company wishes to reach and what strategic advances a widely accepted social media networking platform like Twitter could add to the organization.

"Put yourself in the corporate boardroom at Google," ClearPath Capital Partners Chief Investment Officer Brendan Connaughton explained to Owens. "You say, we see the possibilities of Twitter and its going to cost X. If we took that X and went out and bought three other little companies that can give us a better rate of return, and we don't have to deal with some of the baggage that Twitter has, would that be a better use of capital?"

Meanwhile, the food-delivery app industry may see serious upheaval in 2016. Founder of the consulting firm Rosenheim Advisors, Brita Rosenheim, estimated that there are around 88 companies that offer some sort of food delivery, service or kit service, meaning that there will be major company mergers to combine, contain and conquer this vast business sector. 

"She estimates that $733 million has flooded into in food tech delivery over the last six months from U.S. private investors, representing 57 percent of the total invested in food tech," Beth Kowitt wrote at Fortune. "That's already more than the $697 million that was invested in all of 2014 (representing 28% of all food tech investments)."

Depending on the industry, most analysts agree that the fast-paced momentum that drove the amount of mergers in the technology industry last year is predicted to remain steady.

"If a company can go out and use some of their capital to add to growth either as soon as possible or in the foreseeable future, they'll be rewarded in the marketplace," Connaughton explained to Owens.

To ensure the best deal for your company, consult an M&A advisor today. With professional assistance, your company can make a deal that goes far beyond its initial growth goals. Contact us today to see how your company can benefit from a partnership with our skilled team of experts.