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January 01, 2014

What to Expect in M&A, IPOs for 2014

Many tech companies, including big names like Apple and Yahoo!, have been snapping up companies this year like there’s no tomorrow. Apple alone bought 15 companies this year. Indeed, 451 Research says that there were 3,049 deals valued at a total of $238 billion in 2013.

So, what can we expect in the way of mergers and acquisitions in the year ahead? Let’s take a look.

A survey by 451 Research indicates we can expect a decline in M&A for 2014, likely due to overly high valuation expectations at target companies and the success of tech IPOs in 2013 (a dozen of which saw double-digit valuations). Instead, according to the survey, there will be a record number of IPOs in 2014. The company forecasts 29 tech IPOs this coming year, which it says would be a new record.

However, a recent report by Nightly Business Report on PBS indicates 2014 could be a big year for mergers and acquisitions – at least M&A at large, not necessarily for tech in particular – compared to this year, when transactions were down by 6 percent or more.

Image via Shutterstock

Meanwhile, a survey from KPMG LLP reports that M&A will “remain solid” throughout 2014.  

“We’ve seen a shift in the marketplace from when companies divested non-core assets as a result of the economic downturn to today, pursuing inorganic growth. With favorable conditions in place for increased M&A activity, such as significant cash on corporate balance sheets, more confidence in the overall economy, and continued low interest rates, expanding core business functions through acquisitions is an appealing strategy for organizations,” says Dan Tiemann, KPMG’s Transactions & Restructuring lead for the Americas.

The Motley Fool notes that while M&A in 2013 saw consolidation in tech and industrials, the coming year will likely see M&A of media and telecom giants. That, Motley Fool speculates, is likely to involve cableco consolidation, with Time Warner Cable seen as a likely acquisition target, and the possible combination of Sprint and T-Mobile. 

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