(Hedgefund Intelligence) We are currently witnessing an unprecedented opportunity in the world of M&A arbitrage, with deal spreads at historical wides and a wave of merger activity ahead. This perfect storm of wide deal spreads and frantic deal volume could have the potential to offer real opportunities for M&A arbitrage.
2007 was the last bumper year for M&A (although spreads then were nowhere near as wide as they are now). Post-Credit Crisis, CEO confidence was crushed, which meant that despite a backdrop of cheap financing and low global growth (which should drive deals), management teams were focused on cost-cutting and getting their houses in order. The situation has now changed dramatically.
