An executive order recently signed by President Joe Biden could have a “chilling effect” on the white-hot mergers and acquisition space. Alex Conti, managing director of UHY Corporate Finance offered the following thoughts on the order:
"I think it will have a chilling effect. The bulge bracket kind of sets the stage for the middle market and below. If large corporates are sort of deterred from growing through M&A, the private equity at that upper end is going to take note. They're not going to invest unless they have an exit strategy. If they believe they won't be able to realize an investment, they're unlikely to move forward on the front end."
Conti noted that he's skeptical that the all-stock $26 billion merger of wireless giants T-Mobile and Sprint, completed in 2020, would have passed through the Biden administration given current rhetoric.
On a more local level, he said that the proposed merger between Grand Rapids-based Spectrum Health and Beaumont Health in Southfield makes for a "great example" of the type of deal that's likely to draw scrutiny. The potential benefits of the deal, proposed last month, remain unclear, as Crain's has previously reported.
“The health systems' proposed merger makes for "an example where a provider is trying to get stronger to drive up rates on payers.”
The challenge, he noted, is that "anti-competitive" is something that is difficult for regulators to measure.
"At the end of the day with the FTC, you're in sort of subjective territory to say that something is anti-competitive," Conti said. "There's not like a measuring stick that you use."
This article was originally published by Crain’s Detroit Business. Subscribers can read the full story here.