Corporations flush with cash are eager to engage in mergers and acquisitions (M&A), but only when they feel confident about the economy, veteran risk arbitrager David Simon told CNBC Friday.
“There’s a lot of cash building up on all the balance sheets of big corporations,” said Simon, the CEO and president of Twin Securities.
“They really can’t grow their earnings unless they do strategic deals. They are looking now for some kind of confidence in the economy.”
In general, M&A has been virtually at a standstill this year. M&A activity has been down 13 percent compared to the first half of last year, which was not a good year in terms of value deals.
Simon said he favors strategic deals between public companies, as opposed to private equity buyouts.