TLDR:
- The M&A market has been affected by rising interest rates, inflation, and uncertainty.
- Bank of America’s Shawn Hoyer discusses the impact of cash realities on M&A outlook.
The article discusses how the past few years have been volatile, with rising interest rates, inflation, and uncertainty impacting the M&A market. At the New York Smart Business Dealmakers Conference, Bank of America’s Shawn Hoyer leads a conversation with industry experts on what dealmakers can expect for the remainder of 2024 and beyond.
Hoyer highlights the impact of cash realities on M&A outlook, noting that during COVID, there was a significant increase in private capital-raising activity. This led to lighter terms and higher valuations for tech companies, with founders taking large sums off the table. However, many businesses are now facing challenges as they sit on excess cash and are forced to cut expenses to extend their runway. Hoyer mentions the presence of “zombie-corns” – businesses that are sub-scale and struggling to maintain their valuations.
Industry experts believe that M&A activity will accelerate in the future, but many firms are waiting for the right time to make moves due to factors like interest rates and valuations. Hoyer emphasizes the need for companies to start thinking about selling businesses that may not be worth what they once were.
Overall, the article highlights the current challenges and opportunities in the M&A market, as dealmakers navigate a landscape shaped by cash realities and external factors like interest rates and valuations.
