Mergers and acquisitions are likely to spike now that the U.S. elections are behind us, says Bill Lawlor, deal lawyer at Philadelphia-based Dechert LLP, whose clients include the Washington-based Carlyle Group, which recently bought control of Sunoco's South Philly oil refinery, among other industrial properties.
Corporations have "record levels of cash," borrowed money is cheap, buyout funds are under pressure to produce, and shareholders are restless, notes Lawlor.
With Obama headed back to the White House, expect "continued pressure to get M&A and recapitalization deals done before year end and the "fiscal cliff" talks, which are likely to result in higher taxes for company sellers in the new year, along with worries of higher tax and medical care rates, antitrust enforcement and other corporate expenses that can affect the timing of the urge to merge.
Meanwhile, Carlyle Group says it's raised $1.1 billion for the new fund that clinched the Sunoco deal from investors seeking to buy "middle market" companies "requiring equity capital of $25 million to $150 million per transaction."
"We see incredible opportunities," managing director Rodney Cohen said in a statement. Fundraising topped Carlyle's $1 billion target, he added.
Separately, First Round Capital, the busy West Philly-based investment firm run by Josh Kopelman, Chris Fralic and partners, which specializes in six-figure and low-seven-figure buys in smartphone-app developers and other emergent firms, tells the SEC in a recent filing that it's raised $149 million for a planned new $158 million investments fund.
It's notoriously easier to raise cash to back small firms, when larger firms and buyout artists are providing a ready market and likely profits.