Software integrations may be on the verge of hacking.
Rick Sherlund, chief investment banker, of Bank of America, sees a wave of distressed companies selling themselves cheaper due to the economic downturn.
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“You need to see more capitulation,” the company’s vice president of technology investment banking told CNBC.quick moneyThursday. Expectations for corporate valuation will soften, and this will combine with more efficient financial markets. I think it will speed up the pace of mergers and acquisitions [mergers and acquisitions]. “
His extensive analysis comes on the heels AdobeThursday’s $20 billion deal for design platform Figma. Adobe failed to stir up excitement on Wall Street. Its shares plunged 17% due to Questions about the price tag.
Sherlund, a former software analyst who has made the Institutional Investor No. 1 list 17 times in a row, worked at Goldman Sachs during the 2000 tech bubble. He believes the street is now in the early stages of a challenging market cycle.
“You need to get the third-quarter earnings reports to feel confident that the bad news will probably be there largely in the market because companies are going to report longer sales cycles,” he said. “We need to reset expectations for 2023.”
Sherlund and his team are very active in the M&A market.
“You have private equity with a large load of liquidity, and they need functioning debt markets for leverage to close deals,” Sherlund noted. “They are very keen and are actively looking into this sector… this indicates that [for] Mergers and Acquisitions, in the absence of the IPO market, we will see more mergers coming in this sector.”
He points to the damage to the IPO in terms of high interest rates and inflation.
“[The IPO market] not open. But when you open the window again, you will see a lot of companies go public.”
The The long-term prospects for the programs are very attractiveAccording to Sherlund.
“You have to be very optimistic about the long-term fundamentals of the sector,” Sherlund said. “Every company has become a digital enterprise.”
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