On the opening panel of The Deal's M&A Outlook 2009 conference Tuesday morning, Nicole Arnaboldi, the chairman of DLJ Merchant Banking Partners, spoke about valuations remaining high in spite of market turmoil.
"What I'm seeing is that some deals that come through the pipe are still at really high prices," she said. "However they tend to be extremely stable businesses. Sellers are still reluctant. The only ones coming down [on price] are the forced sellers.
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"It's just in the last couple of weeks," she continued, "that we're starting to see deals coming down the pipe where prices have come down, so it looks like pricing is finally starting to come down. I think we're going to see a big decline in valutions still to come."
As for when credit markets will loosen up so that the wheels of M&A can begin turning again, Arnaboldi thinks, "It's going to be slow. This is a highly dislocated environment, with very little access to credit, so there's going to be very little transaction activity."
As for the $700 billion TARP, she doesn't see that as being able to do the job.
"The key piece of the TARP was to reduce systemic risk," Arnaboldi said. "In a sense just putting the money in did that, but as a secondary objective, getting banks to start lending again, I don't necessarily see it doing that." - George White
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