M&A Becoming More Shareholder-Driven

Today's mergers and acquisitions environment is very complex, moving away from a board-centric model towards a more shareholder-based system, especially in the United States and other Western nations.

"My view is fundamentally the market has turned from an investors market to a renter market— it's not a long-term market," Bob Profusek, global head of M&A at Jones Day, told CNBC's "The Strategy Session" on Monday.

A company with a lot of cash on its balance sheet has to ask: Are shareholders "going to say 'invest it for me' or are they going to say 'give it back to me?'," he said, adding, "the ability to do something kind of like 'damn the shareholders'—that's gone, that's over."

The most important example of this, Profusek said, is a deal that didn't get done: Charles River Laboratories

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[CRL  Loading...      ()   ] announced a $1.6 billion agreement with WuXi in China back in April. But, this proposed transaction called for shareholder approval because it had a stock component to it, and the shareholders said no, leaving Charles River to pay a $30 million breakup fee.

Overall though, M&A deals in the U.S. are up 17 percent from 2009, with S&P 500 companies holding 2 trillion dollars worth of cash as of June 30th, according to the Commerce Department.

"The capital markets are fabulous right now, on the debt side. And even the high yield market isn't so bad. So money is plentiful," the question is "what are you going to do with it?," he said.

August has been a pretty extraordinary period. For this reason Profusek is predicating that the fourth quarter will be very active, in terms of the $1 to $3 billion dollar space.

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