March 14, 2013

Recent business mergers put investors ahead

In an ever-evolving digital world, technology acquisition is becoming more common. Entrepreneurs reap great financial benefits from getting bought by a larger firm, and powerful businesses can provide more to their customers when investing in niche products.

The Associated Press reported that companies are buying each other at the fastest pace since before the recession. For example, since November, U.S. companies have announced a dozen purchases worth $3 billion or more in mining, food, technology, airlines and other industries.

Another example of technology companies entering the mergers and acquisitions market is Dell, the computer giant, opting to switch to being a privately owned business. Michael Dell, founder and CEO, offered to take his publicly traded computer company private with an investment firm for $24 billion, most of that being borrowed money.

Peter Cardillo, chief market economist at Rockwell Global Capital, told the AP that it is a sign that corporate America feels that the expansion is going to accelerate.

"The deals follow other signs that confidence is returning," the article said. "So far this year, initial public offerings have raised the most cash in two decades; small investors are putting money into U.S. stock mutual funds at the fastest pace in five years; and professional investors are borrowing more to finance their trades because they are not as fearful of losing money."

Furthermore, the last time that so many companies paired off was in 2006 and 2007, which was when stocks were surging and investors were pocketing big gains on takeover news.

Dealogic reported that so far this year, $219 billion worth of deals have been announced, more than double the level over the same time last year.

When technology companies are considering an acquisition strategy, working with M&A advisors can be greatly beneficial. These professionals can ensure that if a deal is possible, all organizations involved can be satisfied with the outcome, further pushing the nation's economy back to full strength.