Bankruptcy-related merger and acquisition deals have hit a global peak that is the highest since 2004. The Financial Times recently made the announcement citing data compiled by Thomson Reuters. Considering the current economy that has forced companies to slash budgets and watch revenue fall, bankruptcy M&A cases are not expected to slow down anytime in the near future.
Some experts, including J. Gregory Milmoe, restructuring Co-chair of Skadden, Arps, Slate, Meagher & Flom, feels that mergers and acquisitions will continue to increase. He tells the Financial Times, “Given the dearth of capital and the substantial increase in the number of companies that will be troubled, one would expect the M&A rate to increase dramatically.”
Thomson Reuters identified 67 deals that have taken place so far this year, the bulk of which occurred in the U.S. and Japan, the Financial Times reports. This is likely due to the length of time these countries have been in recession and more liberal bankruptcy rules allowing companies to continue operations as they restructure.
Finally, because it can take a year to a year and a half for insolvencies to peak, the Financial Times reports that data suggests that more merger and acquisitions will be taking place this year.