Recent research points to an increase in demand for smaller acquisitions as a 'soaring' stock market has made listed companies look overpriced. Combined with market and political instability, fewer acquirors are willing to take a bank-or-bust bet on transformative acquisitions.
With fewer 'top table' acquisitions looking viable, is this forcing the C-suite to be more strategically wily in their M&A strategy? Whilst huge acquisitions (with equally huge premiums) certainly grab column inches, are they in the interest of the acquiring company and do they accurately reflect truly perceived synergies + 'X'?
In a refreshingly down-to-earth comment from International Paper CFO, Glen Lander: "Our job is to create value. It is not to get bigger".
Perhaps putting it best, from the WSJ:
"Ken Miller, finance chief at Juniper Networks Inc. acquired a closely-held company earlier this year for an undisclosed amount. Mr. Miller said the company is “always looking” at both public and private targets, but is sensitive to premiums.
“With the stock market so high you have to ask, ‘what’s the upside?’” he said."
We watch with interest.
There are only a few months left for companies to revive 2017’s merger and acquisition activity, write Ezequiel Minaya and Tatyana Shumsky for CFO Journal. Acquirers are pickier this year, preferring smaller transactions as a soaring stock market pumps up company prices. There’s also some hesitancy to striking a deal prior to passage of a U.S. corporate tax overhaul and potential new trade policies.