2015 M&As: A Look at What's Coming
>> Wednesday, January 28, 2015
Mergers and acquisitions were among the stars of the global financial stage in 2014. By the end of September, there had been more closed M&A deals during the year than there had been over the last five years. Financial players handled billions of dollars in mergers and acquisitions transactions by the year's end.
The reason behind the boom is simple: natural outcome of business strategies. With the need to consolidate and cut costs to stay alive, many businesses turned to mergers and acquisitions in the wake of the recession. But even with the recovering economy, it looks as if the uptick in M&A deals may be here to stay for the upcoming financial year.
Media Trends
According to a CNBC report, the shift to digital advertising may spark record M&A activity in the media sector. With more people watching television and movies on the Internet, digital advertising is becoming more important. As a result, several media providers, such as movie and original programming network Starz, have reportedly been in talks with other businesses as the advertising model continues to evolve.
Telecom Sector
Telecom is another hot area for potential mergers and acquisitions. With competition becoming fierce in the telecom market, many companies are looking for surefire ways to retain and expand their customer bases. By being able to offer multiple services, such as Internet and television, telecom providers stand a better chance at keeping their markets. Since M&A deals are a common way for telecom companies to expand service offerings quickly and efficiently, expect a lot of consolidation activity in the telecom sector this coming year.
Oil and Commodities Watch
The price of crude oil has recently dropped even lower than the bottom point over the last five years. If the price of this commodity remains stagnant, the M&A deals may just start flying. Lack of growth is often a trigger for mergers and acquisition activity, and despite the long-standing value of crude oil, this sector is not immune to the effects of stagnation in the market. Smaller companies with less-than-stellar balance sheets are at risk of a takeover in this sort of climate, and even big players in the industry are not safe. London-based BP, for example, has already had to cut jobs because of the market price slump.