GO
Loading...

Wrigley Deal Could be Turning Point for CEOs

As Warren Buffet told CNBC this week, "A good time to buy a really great business is when you can."

And the Oracle of Omaha's decision to get in on Mars' play for Wrigley may mark a change in sentiment of chief executives, according to a recent survey.

Goldman Sachs' latest quarterly survey on CEO confidence about corporate outlook edged up from last quarter's five-year low.

So what’s giving CEOs new reasons to be cheerful?

It's a combination of factors, CT Partners CEO Brian Sullivan told "Squawk Box Europe."

Click Here for Sullivan Interview on CEO Sentiment >>

The Federal Reserve's action on Bear Stearns and its clear willingness to let creeping inflation help to resuscitate the housing market have both helped, Sullivan said.

The series of rate cuts that have taken the base rate down to 2 percent and brought the dollar to record lows against the euro are also making US exporters increasingly competitive, he added.

And now JP Morgan boss Jamie Dimon's decision to help finance the Wrigley deal shows a new willingness from big banks to lend big money.

"All of a sudden you may be seeing that the credit is becoming available, which is going to release private equity firms and allow CEOs to start thinking about strategic acquisitions," Sullivan said.

And while many market watchers warn about the "falling knife" danger of buying assets falling in price, Sullivan argues that there’s still plenty to gain from being brave.

"Perhaps Bank of America could have gotten in a little bit earlier, but they got it," he said.

"And six months from now, when valuations come back they’re going to have it, and nobody else will.”

But the new improved climate doesn't mean it's all plain sailing for CEOs. Sullivan said that one major impact of the credit crunch is the reduced time CEOs have to get it right before the board gives them the boot. And with turbulent markets making it easier to spot those who aren't performing, expect more high-profile causalities along the way.

Contact M&A

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More