Mergers, Acquisitions Sign of Confidence

This week’s Fort Worth Business Press contains an article speculating that recent high-profile acquisitions may show signs of economic recovery. For the article, Bob Francis interviewed Founding Partner Ed Kasper for his thoughts.

Mergers, acquisitions sign of confidence

BY ROBERT FRANCIS

November 09, 2009

Many economic analysts – along with the stock market – are touting Warren Buffett’s $44 billion acquisition of Burlington Northern Santa Fe Corp. as a sign of confidence in the U.S. economy.

If so, Buffett is not alone in his assessment, though he has deeper pockets than most to ride out a longer term downturn, according to Nathanial Karp, chief U.S. economist for BBVA Compass Bank.

“Mr. Buffett is famous for this,” he said. “Some of the companies he has invested in before have been under similar circumstances. He’s shown great foresight in finding value in a particular industry.”

Karp says most investors look at several factors before going into an investment.

“They look at how this asset will perform in the future,” he said. “If you believe the worst is over and things will improve, then there is a window of opportunity to make a good investment. I think we’re there.”

Karp said most investors also consider the sector the company is in and how it is expected to perform in the future, at the industry and on the location of the company. For Karp, seeing mergers and acquisition activity in Texas is not a surprise.

“Texas has been and will continue to be one of the outstanding states in the recovery process and in overall economic growth,” he said. “The recession has been much milder and recovery will be much stronger.”

Ed Kasper, founder and managing partner of Kasper & Associates, a longtime Fort Worth merger and acquisition firm, says he believes companies are ready and eager to make deals after a dry spell.

“I’m not sure people know where it is all going, but I think they believe the worst is over,” he said.

Kasper believes there will be more mergers and acquisitions coming soon, based partially on the fact that his phone has started to ring a bit more often.

“I think – and this is strictly personal opinion – the first quarter of the year and a little bit longer after that, everything ground to a halt,” he said. “It has slowly been changing and now it’s sort of like a dam has burst. People are looking to buy and it opens up with a trickle and then it gets a bit bigger. That’s where I think we are.”

Link to the article: http://www.fwbusinesspress.com/display.php?id=11358

Remember to thank a veteran tomorrow!