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Don’t Fear the Reaper

By November 23, 2016CMF Blog

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I was thinking of a song from the 70’s by Blue Oyster Cult called “Don’t Fear the Reaper” in the context of higher interest rates delivering a mortal blow to M&A. Will Donald Trump’s government and Janet Yellen’s Fed via increased spend and a hawkish viewpoint respectively, be our modern-day deal reapers?

I don’t think so. While we think rates will increase, we also believe slightly higher rates combined with the potential for lower capital gains tax rates in 2017 will:

1. Bring those sellers who have been on the fence into active M&A processes
2. Take some of the hubris out of the market and get pricing down to less lofty market clearing ranges

To quote the opening of “Don’t Fear the Reaper”:

“All our times have come
Here but now they’re gone
Seasons don’t fear the reaper
Nor do the wind, the sun or the rain, we can be like they are”

… “together for eternity…”

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