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Corporate cash vs. M&A antitrust regime

Mar 21, 2022
Corporate cash in the S&P 500
Data (as of 3/9/22): Gordon Dyal & Co, Capital IQ; Chart: Will Chase/Axios

With leverage levels falling, major companies are sitting on a mountain of cash, equipping them with significant acquisition power.

Why it matters: The positive cash trends building in Q1 would seem to set the stage for another record year for U.S. M&A, which notched more than $5 trillion worth of announced deals in 2021.

Yes, but: The data, presented last week at the Tulane Corporate Law event by veteran deal maker Gordon Dyal, clashes with an antitrust regime set to curb mergers, especially anything involving Big Tech.

Of note: Around 20% of the $3.8 trillion in cash (see chart) is held by Big Tech (Amazon, Apple, Facebook, Google and Microsoft). With a tougher Justice Department and Federal Trade Commission in place, that cash appears headed toward buybacks and other initiatives rather than a mega deal.

The bottom line: For at least the last five years, the bogeyman at the Tulane M&A confab was activist investors, who banking, legal, proxy solicitor and PR advisers would often rail against as overly opportunistic and disruptive.

  • The persona non grata title this year went to Lina Khan, the head of the FTC, who deal advisers note has already signaled her intention to crack down on consolidation.
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