It used to be said that one man’s boom leads to another man’s doom. But perhaps the M&A cycle need not pan out that way. Those doomed through a boom in M&A may also be seen as skilled staff, soon to be available.
This spring numbers were strong and they kept getting stronger. As the first half of 2015’s statistics were tabulated, it appears that worldwide M&A activity will reach its highest level since 2007.
In the US, M&A in the first half of 2015 set a new record of $1000bn. More than $260bn of this involves private equity deals, about twice the amount of private equity invested in the first half of 2014. The large M&A totals reflect two principal factors: private equity participation continuing to rise, and an increase of nearly 50% in the number of deals worth $5bn or more.
Looking ahead, it is expected that the global private equity market will double in value to $7000bn by 2020. Sovereign wealth funds, large institutions and even small investors will seek 'alternative investments' as a way to diversify their portfolios.
The private equity investors’ narrative calls for savings from restructuring as a way to create profits or finance growth. Blockbuster merger deals also point to compatible and complementary strengths.
Taken together, the very large deals and the growth of private equity deals will inevitably result in reorganisations, closings and other 'synergistic savings'. Some communities may benefit from the consolidations, but in many communities what were once anchor employers may soon be anchors aweigh.
The greenfield investor has an opportunity. The increase in newly redundant staff provides a pool of talent. And it is a bit easier to be a new employer of choice when old employers are letting folks go. The M&A boom leads to redundancy doom, but it might also foster greenfield blooms.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations. Email: firstname.lastname@example.org