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Merger and Acquisition Activity Set to Rebound, Says Goldman Sachs
Potential Candidates for Merger and Acquisition Activity
Goldman Sachs predicts a resurgence in merger and acquisition (M&A) activity as the recent rise in interest rates reaches its peak. With capital becoming more available, there are numerous potential candidates that could be bought out in the next wave of M&A. To determine these candidates, Goldman Sachs polled its analysts, asking them to assign rankings based on the probability of M&A activity for the companies under its research coverage. Those with a probability range of 30%-50% received a ranking of "1," while companies with a probability range of 15%-30% received a ranking of "2."
Sluggish First Half of the Year
Due to a tight credit environment and concerns about a potential recession, M&A activity had a slow start in the first half of the year. In the second quarter, the number of deals reached worldwide dropped by 30% compared to the same period last year, according to data from S&P Global Market Intelligence. However, as interest rates level off, it is expected that the market will open up, presenting opportunities for potential takeovers.
Goldman Sachs has identified several potential candidates for M&A activity. These include consumer names such as Molson Coors Beverage, Olaplex, Bellring Brands, and Simply Good Foods. Citi has specifically highlighted Molson Coors as a beneficiary of the Bud Light controversy throughout the summer. Additionally, health care stocks Maravai LifeSciences, Quanterix Corp., and Enhabit are considered to have a relatively high likelihood of being M&A targets in the next 12 months according to Goldman analysts.
A Promising Outlook
With interest rates stabilizing and capital becoming more readily available, the M&A landscape is expected to pick up momentum. As companies position themselves for growth and capitalize on potential synergies, this next wave of M&A activity could lead to significant changes in various industries. Investors will be closely watching for potential opportunities and market trends as these acquisitions unfold in the coming months.
Conclusion: New Businesses Must Seize M&A Opportunities
An Era of Resurgent M&A Activity
According to Goldman Sachs, the recent rise in interest rates reaching its peak signals a resurgence in merger and acquisition (M&A) activity. This is excellent news for new businesses looking to make their mark in the market. As capital becomes more readily available and interest rates stabilize, there will be increased opportunities for potential takeovers and industry consolidation.
Taking Advantage of Market Openings
The sluggish first half of the year, characterized by tight credit conditions and recession concerns, saw a notable drop in M&A deals worldwide. However, as interest rates level off, the M&A market is expected to open up, creating potential opportunities for new businesses to position themselves strategically for growth. By identifying emerging market trends and potential synergistic partnerships, new businesses can seek to capitalize on this next wave of M&A activity.
Smart Targets and Rising Industries
Identified potential M&A targets include prominent consumer names such as Molson Coors Beverage, Olaplex, Bellring Brands, and Simply Good Foods. Health care stocks like Maravai LifeSciences, Quanterix Corp., and Enhabit are also considered likely candidates for being acquisition targets. New businesses operating in these sectors can analyze the market dynamics and position themselves attractively for potential M&A activity. By aligning their business strategies with emerging industry trends, these businesses can increase their attractiveness to potential acquirers.
Tapping into Growth Opportunities
The promising outlook for increased M&A activity presents an opportunity for new businesses to not only secure growth capital but also potentially leverage the resources and synergies of more established players. By positioning themselves as desirable targets, new businesses can attract the attention of larger companies seeking growth through acquisition. This allows for the possibility of accelerated growth, access to new markets, and enhanced product development capabilities.
In conclusion, the anticipated rebound in merger and acquisition activity offers new businesses an exciting avenue for growth and market expansion. By actively monitoring market trends, identifying potential acquirers, and aligning their strategies accordingly, new businesses can position themselves to take advantage of this resurgence in M&A activity and propel themselves to success in their respective industries.
Article First Published at: https://www.cnbc.com/2023/07/21/these-stocks-could-be-bought-in-the-next-12-months-goldman-speculates.html