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M&A Advice for the Brave

Consumer confidence is shattered. Credit has tightened. And companies are about to be hit with hundreds of billions of dollars of debt maturities scheduled to come by the end of 2009.

So it’s no wonder that most CEOs are feeling a little a gun shy about doing big deals. In 2008, companies announced only $2.9 trillion worth of mergers and acquisitions, a fraction of the $4.2 trillion announced the previous year, according to ThomsonReuters. And most bankers do not expect mergers to come roaring back any time soon.

Nevertheless, as for those CEOs that can put their nerves aside, the chances for snapping up a rival on the cheap have never been better. There are few buyers out there to bid up prices, leaving the field wide open for those who dare to attempt to snap up an asset for a cheap price or even take out their rivals.

In fact, Boon Sim, head of mergers and acquisitions at Credit Suisse, advises executives that they “should aggressively go out and look at companies that have in the past said no to them.” With the overall stress and nervousness about the economy, Sim argues, “shareholders are likely to be more responsive to an unsolicited offer.”

Plus the list of vulnerable players will likely get longer. Many companies are “suffering from a financial crisis, a business model crisis, or both,” says Paul Parker, head of global mergers and acquisitions at Barclays Capital.

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