The New York Times reports today that the first half of 2012 has been pretty dismal in mergers and acquisitions. Total dollar volume is down almost 22% from the same period last year, and the number of deals is down 17%. Oil and gas was the busiest sector but was also down 5% from last year. Financial services, real estate and natural resources were also active.
M&A activity matters across both small and large cap markets. We have worked on a number of acquisitions this year, mostly existing businesses adding synergistic business opportunities. But many deals are not getting done simply because buyers and sellers are having a tough time agreeing on valuations. Plus the up and down market makes some folks nervous.
We hear about continuing layoffs at large law firms in areas servicing M&A. All I can tell you is that corporate finance, private placements, public offerings and companies going public remain active for us even if we're not doing a ton of M&A.
Another result of weak M&A: tougher exits for private equity and venture capital investors. Since the IPO market also remains weak, this leaves few alternatives for funds. If more would only consider alternatives to IPOs such as self-filings and reverse mergers, a new door would open to allow clean and profitable paths to exits from their investments. Maybe some will!
For additional insights on reverse mergers, SPACs, other alternatives to traditional initial public offerings, the small and microcap markets and the economy, visit the Reverse Merger and SPAC Blog by David N. Feldman, Esq., Partner of Richardson & Patel LLP.
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