The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Didn’t you buy up in 2008? | Reuters

zyakaira notes: i think private equity missed the bus by being too conservative with shortlisting criteria! Or all of them were overleveraged, Anyways, the list of winners is pretty small and I am there!

Stock markets rewarded companies such as Johnson & Johnson JNJ.N and Cisco CSCO.O who were brave enough to make acquisitions in the months after Lehman Brothers collapse, a study released on Monday showed.Although firms who made purchases worth $100 million or more suffered an average 25.5 percent fall in their stock price, they outperformed the wider market by 6.3 percentage points, the Towers Perrin/Cass Business School research found.

Global mergers and acquisitions M&A plunged 40 percent in the first half of 2009 to $941 billion, as shrinking economies, volatile markets and scarce debt hammered corporate confidence. The World Bank forecasts the global economy will shrink 2.9 percent this year.

“Companies with M&A in mind should be emboldened by our analysis: fortune favors the brave,” the studys authors, led by Marco Boschetti, wrote. “Fears that M&A is riskier post-Lehman seem to be misplaced.”Repeat acquirers did even better, on average outperforming the MSCI World Index by 8.1 percent.Among them, Cisco Systems Inc, Johnson & Johnson, Abbott Laboratories ABT.N, BG Group Plc BG.L, and Symantec Corp SYMC.O all outperformed world, regional and sector indexes.However, other multiple acquirers such as Eli Lilly and Co LLY.N, Medtronic Inc MDT.N and Banco Santander SA SAN.MC underperformed on some or all measures.


This entry was posted on July 6, 2009 by in Financial Markets, Investments, TARP, Uncategorized, US and tagged , , , , , , .


%d bloggers like this: