Trend Watch: Mergers and Acquisitions Picking Up Speed

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A growing confidence in the marketplace has accelerated the number of mergers and acquisitions across the region and may continue to motivate future M&A activity throughout southeast Michigan.

“From major and middle-market deals all the way down to even some of the smaller deals, we’re definitely seeing an uptick across the board,” says Jim Cunningham, an attorney at Warner Norcross & Judd in Southfield and Macomb, which counts mergers and acquisitions among its specialties. He estimates that M&A activity has nearly doubled in the last three to four years.

Cunningham cites examples that include IHS Inc.’s recent acquisition of R.L. Polk & Co. in Southfield and Encore Capital Group Inc.’s recent takeover of Warren-based Asset Acceptance Capital Corp.

“The cost of capital has been relatively low here in the recent past, and it’s hard not to acknowledge the fact that businesses have really built strong balance sheets,” he says. “And as a result, companies have made moves to either obtain or retain their competitive edge.”

Cunningham says that rather than acquiring a small supplier or adding a new product category, companies are making larger deals that could greatly impact their business and, in turn, other companies. “There’s something to be said for a ‘contagious effect’ when it comes to larger and more transformative deal making,” he says.

He says overall, increased M&A growth means good things for the state. “We need strong companies, particularly in the southeastern region of Michigan, to attract talent and continue to growth the business community here,” he says.

The continued growth in activity is likely to occur with deals both big and small, although Cunningham says he sees interest particularly in retail and consumer products, energy, pharmaceuticals, and banking. 

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