A Word on the Risks
Of course, this party won’t last forever. Nothing ever does. The world of mergers and acquisitions is notoriously cyclical. It thrives on confidence and cheap money. If interest rates climb too high, or if a recession spooks the markets, CEOs will lock their chequebooks in the drawer and wait for sunnier days. Regulators are also getting a bit more assertive, taking a much harder look at deals, especially in the tech sector. A failed deal still generates some fees, but it’s pennies compared to the jackpot of a completed transaction. Investing in this theme is not without its risks, and the tide could certainly turn.
For an investor, trying to guess the next takeover target is a fool’s errand. You might as well be at the races, betting on a horse because you like its name. I think a more pragmatic approach is to bet on the people selling the tickets and running the racecourse. By focusing on the dealmakers themselves, you could potentially benefit from the overall trend, regardless of whether it’s a tech deal in America or a healthcare merger in Europe. A collection of these firms, like the The Dealmakers: M&A Boom, offers one way to look at this theme, bundling the very institutions that profit from this corporate churn. It’s an interesting thought, isn’t it? Focusing not on the players, but on the game itself.
