Corporate caution to the wind

This issue of Investment Insights we explore whether investors remain complacent and risk adverse despite the strong macroeconomic backdrop benefiting equity markets.

10 Feb 2018

In the fourth quarter of 2017 it was clear that many companies were watching and waiting for passage of the Tax Cuts and Jobs Act before moving forward with long-term corporate planning. Ian Read, CEO of Pfizer, put it best in his company’s second quarter earnings call last year, stating, “There are short term events in the marketplace, such as tax reform, that may change asset values. Any focus on business development is somewhat delayed by the resolution of that.” Certainly, deal activity slowed somewhat in the back half of 2017. However, with the recent passage of the tax bill, this sentiment seems to be dissipating. Greater certainty is likely to embolden corporate leadership to act more decisively, and we believe that the result will be an increased level of mergers and acquisitions (M&A) activity.

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