Just In Time For Expected M&A Drought, Here Come The Demergers
from the spinoff dept
The credit crunch may put some M&A activity on ice, but don't expect investment bankers to go hungry anytime soon. According to a recent survey, global executives expect to see plenty of demergers -- the practice of spinning off or selling business units. Of course, these things go in cycles. After any period of consolidations, bankers will encourage companies to "unlock shareholder value", by spinning off all of those units that were acquired during the previous wave. Undoubtedly, the executives predicting more demerger activity have been influenced by what their investment banking partners have advised them. In addition to the cyclicality of this, there's another reason to expect more of this activity. Selling off business lines can serve as a substitute for selling bonds when credit markets aren't being cooperative.