Wall Street braces for merger boom. These names may be attractive targets | Wilnesh News
Wall Street is cheering for a resurgence in M&A activity under the new Trump administration, with bankers and investors already scrambling to identify deals that might go ahead first. The combination of rising interest rates by the Federal Reserve and aggressive antitrust measures by Federal Trade Commission Chair Lina Khan has made dealmaking progress very slowly over the past few years. Now that the election is over and changes are likely at the FTC, Wall Street is gearing up for a new era. “The end of the election first removes uncertainty from the market. The market likes certainty and you see this across the capital markets. … In the medium to long term, it should further promote IPOs, M&A and key business development. We invest industry,” Carlyle CEO Harvey Schwartz said during an earnings call on November 7. Ahead of Trump’s victory, the M&A business is already showing some signs of recovery. Morgan Stanley said deal announcement volume will rise 25% year-on-year in 2024, following a historically quiet 2023. Debt transactions. Stephanie McCann, a partner at the law firm, said: “As interest rates come down, we’re clearly seeing greater alignment between sellers and buyers, with valuation gaps getting smaller and smaller, and with that With leverage increasing and capital costs falling, the size and scope of deals may begin to expand in the coming months as the Fed cuts interest rates again in November and is expected to shift to a more business-friendly regulatory environment in January. . A common motivation for potential candidate companies to acquire another company is growth. A larger, more established company wants to show investors that it is not without ideas and may consider absorbing a smaller, faster-growing company. To achieve this goal. In this regard, Wolf Research has identified small and medium-sized companies with high projected growth rates. One of them is elf Beauty, which made a big deal last year by acquiring Naturium for $355 million. Acquisition. After some news this week, another name on the list may be more likely to pursue a sale: Hims & Hers shares fell more than 24% on Thursday after Amazon announced that it would start offering similar health products to Prime members. The list of companies seen as strong candidates for M&A activity in the next 12 months includes larger companies such as Electronic Arts and Zoom Video Communications since Microsoft acquired Activision Blizzard in 2023. EA has been a widely speculated takeover target by major technology or media companies. The pace of bank transactions over the past few years has been slower than during the 2008 financial crisis, making the group ripe for a rebound, said Ed Mills, a Washington policy analyst at Raymond James. Speaking to CNBC: “In my view, bank M&A has reopened for every bank except the globally systemically important banks. Related to the financial sector, shares of Capital One and Discover Financial Services soared immediately after the election. A proposed merger between the two companies appears likely to be untenable if Democrats remain in power. Hold on. Discover Financial’s DFS shares surged after Donald Trump’s election. Other candidates to watch are deals that have failed in recent years due to regulatory pressure, such as the one between the two companies. The merger was blocked by a judge and then called off last week, but both companies could be players moving forward, with Spirit Airlines also likely to be on the table again after deals with Frontier Airlines and JetBlue Airways fell through. The troubled airline said last week it was in “constructive negotiations” with creditors. Potential Problems While Trump’s second term is expected to be more business-friendly than President Joe Biden’s, it remains to be seen how the new administration will handle antitrust issues. Regulators did launch investigations into big tech companies during Trump’s first administration, and Trump’s nominee for attorney general, Matt Gaetz, appears to be facing a contentious confirmation process. “I think there’s probably a degree of wishful thinking that antitrust regulation is going to take some kind of laissez-faire approach, which I think is misguided. There’s still a populist tone in the Trump campaign… In my opinion, enforcement is what I think It’s just a span of more cautious, less aggressive enforcement,” said Kyle Healy, a partner at law firm Alston & Bird who focuses on mergers and acquisitions. Another issue may be cost. Before the election, the S&P 500 was near all-time highs, with the small-cap benchmark Russell 2000 rising 4.9% in November. This can make finding the right price for an acquisition target a bit tricky. “The price is pretty high,” Warner Music and Snap chairman Michael Lynton told CNBC’s “Squawk on the Street” on Nov. 6, as post-election rallies were beginning. “At some point, the price is pretty high.” , this will become a major consideration.
