Investors are now in an expectant mood, whilst in spring the market will pick up and we will again see serious interest from investors regarding deals, believes Serban Toader, senior partner with KPMG Romania.
The M&A market has witnessed a spectacular trend over the past two or three years and a boom in deals. At present, "there's a quite a big gap between buyers' and sellers' expectations," Toader maintains.
He considers that generally we are going to see sellers' expectations fall, which is good.
"This means the market will pick up and have positive effects on the real economy. I'm sure there will come a time when the two lines cross, but at what level? Prices will certainly be smaller than before. I expect the gap to narrow toward spring and I also expect to see many deals in spring," said Toader.
Referring to the real estate market, Toader says we will further see real estate projects that were financed in a healthy manner and many of them will be carried out and be successful.
Amid the international crisis, Toader advises companies to be quick to react, to be flexible, review their financing arrangements and even consider alternative sources. Toader explains that from an economic point of view, regarding risk management, organisations have to consider ways of optimising both fixed costs, related to investments, and variable costs, such as wage ones.
As regards the strategies companies should embrace, KPMG official says cash management is of high importance now. Another element that needs to be taken into consideration is cost control, with Toader recommending companies to stay "pragmatic".
"Companies must not rush to slash wage costs, but reanalyse the entire cost structure and see where they can become more efficient".
Another suggestion for companies is for them to think there's the possibility of giving up some assets if these are not part of the respective company's main assets.
As regards possible consolidations, in the context of the international financial crisis, Toader explained that in expansion and rapid growth periods, a lot of "ballast" piles up. "Now it's the time we focused on the positive side of the situation: like when it rains, we will stay indoors and clean up. Now we're tiding up our organisation (...)".
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