Mergers that reward ...

A number of studies have shown that mergers don't really reward existing investors in the buyers. Investors in the target companies usually end up richer, especially if the takeover transaction involves a substantial cash portion.

But a piece in WSJ today shows that last year was different! The mergers have been very successful for investors in the buying companies too. This is attributed to the careful due diligence by the buyers and less-than-spectacular premiums paid. If true, this marks one extreme in the M&A cycle and we should see an increase in the pace of takeovers.

Given the expected political stability, the only things that may make buyers think twice are the rising interest rate regime that makes borrowing expensive and possible fall in consumer confidence if real-estate takes a hit.