Mergers involving small-cap companies are accelerating and are likely to continue, with the technology, finance and healthcare industries seeing the most activity, according to Merrill Lynch’s SmallCap Strategy report.
The value of deals in the medical-device business is already twice that seen in all of 2005, with $6.4 billion in mergers and acquisitions, the report noted. For healthcare as a whole, “consolidation should remain strong as firms aggressively search for growth and have liquid balance sheets.”
The report concluded:
The accelerating M&A trend supports our contention that the equity base of the smaller cap market is likely to shrink and, as a result, stabilize multiples or force them higher. The 2006 full year estimate of 368 deals is higher than the 329 deals announced in 2005 and even higher than the 299 deals recorded in 2004. The backdrop for M&A remains favorable or the 3 C’s of consolidation are in place - capital access, cyclicality and corporate valuations.
Wednesday, August 02, 2006
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