Why the Dearth of Deals?
The underlying reason why M&A has slowed today is slackened company sales revenue which, in turn, narrows operating margins or worse, triggers operating losses. Anemic demand therefore presents a host of related concerns for prospective buyers and sellers, and it is these concerns that the press more frequently reports. For sellers, flat or declining sales and depressed profitability usually translate into low transaction value. Therefore, if they can afford it, many such sellers prefer to hunker down, await demands return, and then presumably enjoy stronger enterprise value later. For some sellers, however, waiting is problematic: their weak balance sheets dont tolerate continued losses well, and especially for IT and professional services companies, external capital is nearly unobtainable. Even long-term status quo operation has a downside: both employees and investors weary of going sideways. So such players already having cut overhead as much as practicable — are gambling that dem
