{"id":476,"date":"2010-08-23T12:17:00","date_gmt":"2010-08-23T16:17:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=476"},"modified":"2018-08-17T15:42:55","modified_gmt":"2018-08-17T19:42:55","slug":"what-acquisitions-mean-right-now","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/08\/23\/what-acquisitions-mean-right-now\/","title":{"rendered":"What acquisitions mean right now"},"content":{"rendered":"<p><span style=\"font-size: 16px;\">Good morning everyone!\u00a0 I hope that each of you had an excellent weekend.\u00a0 Today I wanted to write about the high number of mergers\/acquisitions that are either taking place or being discussed by businesses.\u00a0 In particular, what does that mean?<\/span><\/p>\n<p><span style=\"font-size: 16px;\">First of all, let me document some of the\u00a0acquisition announcements in the news currently&#8230;<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">Dell is attempting to buy data-storage company 3-Par.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">Hewlett-Packard announced a rival bid for 3-Par just this morning.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">China&#8217;s Hopu private equity fund is mulling a bid for mining firm Potash.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">BHP had made a bid for Potash earlier this month that was rejected.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">HSBC bank is making a bid for a majority stake in South Africa&#8217;s Nedbank.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">India&#8217;s Mahindra &amp; Mahindra automaker is looking to buy South Korea&#8217;s Ssanyong Motors.<\/span><\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-size: 16px;\">Brookfield Asset Management is looking to take over Prime Infrastructure of Australia<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">Etc.\u00a0 These are just the major deals taking place.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">But what does it all mean?\u00a0 Recall that one of the signs I pointed to that the last recession was abating was the increase in the number of mergers and acquisitions that were taking place.\u00a0 Businesses are investors in assets, too.\u00a0 When they start bidding for the assets of other firms it&#8217;s a sign that they are getting more comfortable with the state of things.\u00a0 You don&#8217;t bid for the shares of another business unless you believe\u00a0several things:<\/span><\/p>\n<p><span style=\"font-size: 16px;\">1.\u00a0 That the price of the business you are bidding for\u00a0is at, or near\u00a0its bottom; or that your stock price or other purchasing assets are at their maximum in price.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">2.\u00a0 That your business is made more competitive by acquiring the assets of the other business.\u00a0 This means that as a business leader you are looking to the future and less worried about what has happened in the past or is happening now.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">3.\u00a0 That <strong><em>now<\/em><\/strong> is the time to be buying.\u00a0 Acquisitions are expensive and risky.\u00a0 So if business leaders felt that the state of the world was near collapse &#8211; which financial asset investors seem to be pricing into\u00a0shares\u00a0of businesses &#8211; they wouldn&#8217;t be buying now.\u00a0 Instead they would be waiting for prices of their acquisition targets\u00a0to fall.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">In other words, it is a fairly bullish sign on the part of businesses to be buying right now.\u00a0 The only mitigating factor could be that the acquirers do foresee a period of slow growth for their core businesses.\u00a0 Therefore, acquiring another firm is one way to assure yourself of future revenue and profit growth.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">It will take some time to sort through which scenario is actually operating.\u00a0 I tend to think that businesses must be feeling fairly stable in order to be taking on the risk and enormous task of buying another business.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Good morning everyone!\u00a0 I hope that each of you had an excellent weekend.\u00a0 Today I wanted to write about the high number of mergers\/acquisitions that are either taking place or being discussed by businesses.\u00a0 In particular, what does that mean? First of all, let me document some of the\u00a0acquisition announcements in the news currently&#8230; Dell [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-476","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=476"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/476\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}