M&A Activity
September 27th, 2010
I have written extensively on business combinations over the past six months, including “hidden” costs associated with their taking place.
The current economic environment, that of slow top line growth with a boost in year over year financial flexibility is often a recipe for happy investment bankers. But what does it mean for equities?
Here, history is crystal clear: investors would be incorrect to presume a step-up in merger activity would presage higher stock prices, which can only take place with improvements in free cash flows and reductions in the cost of capital.
While the cost of after tax debt continues to decline, the cost of equity has remained stable over the past month.
Categories: General
