Will the shaky credit market leave the investment bankers on vacation into the fall? Dan Primack of peHUB.com joins the guys with his take.
Primack thinks the deals will continue – they will just be different. It’s unlikely to count on huge buyouts every Monday like we had seen, but plenty of private equity firms still have an abundance of cash and they will put it to work, even if the deals are smaller, he says.
The fact that it has become so difficult to borrow money in the bond market doesn’t mean M&A activity will die, Primack says. Banks can’t sit on the sidelines for too long because the fees are simply too large. “If the right deal comes along, you’ll be able to borrow money for it,” he says.
Primack thinks the deal making will heat up again by the third week in September, which is a reasonable amount of time for investors to deal with the shock of the credit crunch and get back into deal making mode under different terms, he says.
There will be re-pricing of deals going forward, Primack says. Look for things to go back to the 2002-03 days of private equity when firms bought underperforming companies and sold them higher, instead of the recent spat of “buying high and selling even higher.”
Guy Adami says an argument could be made that the private equity deal making is what took the market to its highs, but fundamentals still hold true and “earnings are king,” he says.
Look for deals to start heating up in emerging markets as well, Pete Najarian says. Deal making had been difficult in India and China because everything was overpriced due to competition levels. That all could change going forward.
Jeff Macke thinks it is still too early to go back in.
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Trader disclosure: On the date of taping, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Seymour Owns (AAPL), (TWX), (INTC), Is Short (MS); Macke Owns (EMC), (INTC), (ATVI), (DIS); NBC Universal is the Parent Company of CNBC