Investment bankers believe that 2011 may be the busiest year for takeovers since 2007. Professor Allen Michel is an M&A expert from the Finance and Economics Department of Boston University’s School of Management. He offers the following comment on the recent boom of new takeover deals:
“Valuations are increasing because of the perceived increase in growth among both CEOs and economists.
“The key parameter in determining an appropriate multiple for an acquisition is the anticipated growth rate of the target’s cash flows. At this point in the business cycle, that value has grown significantly from the values apparent at the depths of the recession.
“I would expect those values to continue to increase, before falling back to more sustainable levels.”
Contact Allen Michel, 617-353-4167, amichel@bu.edu
