$1.3 Trillion Corporate Deal Boom Now Facing Debt Struggles
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A $1.3 trillion corporate M&A boom fueled by cheap debt now faces challenges as companies struggle to deliver on synergies and reduce leverage while servicing large debt loads.
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Less than half of 75 major deals totaling $1.3 trillion over the past 5 years have cut leverage since acquiring.
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Almost a third now have a leverage ratio above 3.5, up from 16 previously, suggesting ratings agencies have given buyers leeway.
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Average net debt to earnings before interest, taxes, depreciation and amortization increased to 2.7 from 2.4.
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Companies like Walgreens, Rogers Communications, and Bayer have seen credit downgrades after failing to deliver on lofty M&A goals and reduce debt burdens.