PWC released its second quarter report on M&A activity in the industrial products sector. Two items from the report stood out for me. First, M&A activity in the second quarter actually rose compared to the first quarter of 2009 (although still down significantly compared to last year). This could be a sign that some of the fear that has gripped the marketplace is beginning to subside. Second, the following quote struck me:
Strategic buyers continued to act as the main investors in the majority of deals in all segments of the industrial products industry as financial investors remained on the sidelines because of continued tight credit markets and a lack of liquidity.
Cash continues to be king. Companies that have cash are using it to snap up weak competition and make strategic moves to strengthen themselves for the future. They are making small, targeted acquisitions to calibrate their business.
At Capstone, we are continuing to push our clients to be active buyers in this market. Our mantra remains: “If not now, when?”