Academic journal article Journal of Accountancy

M & A Activity Declines Further in Early 1990

Academic journal article Journal of Accountancy

M & A Activity Declines Further in Early 1990

Article excerpt

M&A ACTIVITY DECLINES FURTHER IN EARLY 1990

CPAs associated with clients or companies involved in merger or acquisition negotiations should advise caution in all aspects of the deal because the M&A market is in a pronounced decline.

The collapse of the junk bond market has made it increasingly difficult for buyers to raise capital. As a result, many "done deals" have fallen apart and others have been consummated at significantly lower prices only after renegotiations.

To understand the extent of the merger activity decrease, consider the following examples from a report on M&A activity in the first three months of 1990, compiled by the Securities Data Company.

* Overall domestic merger activity declined 52% from the first quarter of 1989, when 398 deals of $10 million or more (totaling $102.6 billion) were announced. This year, 235 transactions (valued at $49.4 billion) were announced, a decline of 29% from the already depressed levels of the fourth quarter of 1989. …

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