M&A Activity is Barometer for Recovery: Bank of America Exec
With global M&A volume reaching its highest on record for the month August and $300 trillion dollars on coporate balance sheets, look for CEOs to start deploying more cash on mergers and acquistions.
"We only see M&A activity when there's a belief that we're in a recovery near the end," Jeff Kaplan, global head of M&A and corporate finance at Bank of America Merrill Lynch, told CNBC's The Strategy Sessionon Friday.
"Big tech companies have the lion share of this cash," just look at the bidding war that took place between Hewlett-Packard and Dellover the cloud-based storage application company 3Par, he said.
Ultimately, HP raised its offer to $33.00 per share, approximately $2.1 billion and Dell decided to not raise its bid. Other sectors are also seeing an increase in activity.
Take the huge cross-border battle going on with the mining company BHP Billiton making a hostile all-cash offer to acquire Canada's Potash, the world's largest fertilizer enterprise.
"CEO's and board of directors are telling us today that they have some confidence," Kaplan said, adding, "to me it's fairly broad based, its not a blip, it doesn't ensure a recovery but in our minds we think this is a barometer for recovery and that the M&A environment will continue to be good to year end."