2015: Another Great for M&As and IPOs

Posted by Admin | June 18th, 2015

After 2014 saw both the volume of mergers and acquisitions as well as initial public offerings go up for the first time since the crash of 2007, projections started looking good for 2015. This has proven true to an extent; the first few months of the year have seen plenty of activity on the markets and given rise to some optimism on this front for the rest of the year as well. Let’s have a quick look at what the experts are saying about these topics.

Mergers and Acquisitions

At the “Market Trends: 2015 Outlook IPO and M&A” panel held in November 2013, several experts in the field agreed that 2015 would be a great year for both IPOs and mergers. An independent survey held by KPMG among 735 M&A professionals confirmed this statement. Eighty-two percent of those interviewed have made plans to make at least one acquisition this year, while 41 percent were considering two or more. The money involved in these ventures also promises to break all records. In 2014, deals amounted to $1 trillion, and in 2015, it looks as if this may be even more.

The biggest deals are projected to be in the technology sector, despite the Comcast takeover of Time Warner falling through, and the healthcare sector in the U.S. according to the KPMG report. Healthcare deals promise to be big thanks to the many changes that U.S. President Obama’s Affordable Care Act has brought about in that sector, as many businesses will see changes in their revenue.

Initial Public Offerings

Fueled by pent up supply and a yearning to break out of the fetters created by the Great Recession, IPO activity exploded in 2014, a trend expected to continue this year, especially as last year’s major offering, the Alibaba IPO, was as successful as it was. There are rumors circulating that other tech companies are going to follow the Chinese eBay’s example, with names like AirBnB, Spotify, DropBox and Uber coming up the most. In any of these cases, an IPO would be a multi-billion dollar affair. Currently the most likely candidate is Spotify, as they put an ad up for a U.S. filings expert in early 2014 and they have plenty of equity to finance a listing.

Less likely is DropBox, as it is currently waging a war against several rivals, which in its market segment may take a very long time to resolve when services are provided for free and it’s very hard to contain the competition. AirBnB and Uber both are prime candidates for an IPO, but both of these multi-billion dollar companies are embroiled in lawsuits all over the globe. The business strategy they have built their wealth upon is encountering great resistance among “traditional” service providers and governments, resistance further exacerbated after several stories broke of AirBnB hosts and Uber drivers committing sex crimes.

In Europe and parts of Asia especially, it’s proven hard for both of these companies to establish themselves and they have repeatedly run into licensing issues, especially considering that Uber has occasionally entered new markets under the guise of a non-transport company. In Taiwan, for example, the ride-sharing service got a business license as a technology firm, a move that led to censure of their app on Taiwanese soil.

Another major sector for IPOs is likely to be healthcare, and in the case of mergers, Obamacare will likely wreak a moderate amount of havoc among providers of care, medicines and tools. In many cases, investors as well as buyers will need to determine on a case-by-case basis what projected future earnings will be. There’s plenty of change going round this year, and it will be up to investors to decide how to capitalize on these revolutions.