What will be one of the key performance drivers for the second half of the bull market? The short answer is the same catalyst that brought the stock market down during the latter half of the last bear market: Liquidity.
Today’s takeovers appear to make better strategic sense, and are coming at the hands of companies with good credit ratings, strong balance sheets, and good cash positions. This month’s “Of Special Interest” looks at the possibility that a rebound in M&A activity could heal an ailing stock market.
Cash takeovers (including private equity buyouts) provided a very conducive environment for the stock market to rise, but there are now signs that this era of endless cheap money available to corporate and private equity buyers could be coming to an end.
The key to the 2006 Supply/Demand factors has been the huge level of Cash Acquisitions this year. Current levels smash prior 2005 record level. This bullish trend could continue to support a rising stock market.