Recently, it was announced that Media General, a television and magazine company, is selling its business to Meredith for an estimated $3 billion. Maryland readers may already be aware that this sale pushes the dollar amount of mergers and acquisitions to a record high. The last time this many companies and individuals were selling a business on this scale was in 1999.
In 1999, the total amount of money spent on mergers and acquisitions was $1.497 trillion. So far in 2015, the amount spent has already reached approximately $1.503 trillion. The largest deal so far this year was the sale of Time Warner Cable to Charter Communications for almost $79 billion.
The amount of the sale is estimated to be around 25 percent higher than similar deals in the cable industry. This is due, at least in part, to the fact that Charter is paying more than 9.5 times Time Warner's earnings. Paying such premium prices for businesses is not limited to that industry, however. Berkshire Hathaway, owned by Warren Buffet, paid approximately $30 billion (20 times the earnings) for a company called Precision Castparts that manufactures components for the energy and airline industry.
There is speculation that this trend may not continue through the last months of this year. Regardless, it would seem that this is the right time for a Maryland company considering selling a business to do so. Once that decision is made, there will be numerous business and legal issues to resolve. Ensuring that everything is done properly will most likely require some assistance since it is better to have things done right the first time in order to avoid issues in the future.
Source: Fortune, "$3 billion deal for Meredith creates an all-time M&A record", Stephen Gandel, Sept. 8, 2015