Buying Into A Recovery

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In corporate planning rooms, however, hopes are likely to stay on the mend. There is little chance that CEOs planning deals will recoil. Companies seeking to divest a noncore asset or buy one that fits a strategic need can't wait forever. With stock prices no longer falling and the worst earnings news evidently behind us, bankers say, buyers and sellers of companies are better able to value assets and are eager to explore options. For example, analysts who cover J.P. Morgan Chase say the bank, stung by its exposure to investment banking, is looking for an acquisition in the consumer-lending area to diversify further.

"There's a lot more dialogue at the CEO level," says Steve Baronoff, head of global M&A at Merrill Lynch. "As CEO confidence grows, you'll see a lot more pull the trigger on deals." He notes that the deal pipeline at Merrill has begun to refill in the past month and that economically sensitive companies--including tech, telecom and media--have begun discussing deals that could take place the first half of next year.

Likewise, the IPO market is firming. Insurance company Anthem went public a few weeks ago and has soared 37%. Weight Watchers went public in mid-November, and the stock is up 32%. Magma Design, a tech IPO, has soared 45%. "We haven't seen a string like that in a long time," says Linda Killian, analyst at Renaissance Capital. Sensing a buoyant market a few months out, billionaire investor Laurence Tisch at Loews Corp. just filed to sell shares of his Lorillard Tobacco in an IPO. He too is reading the tea leaves--and seeing good things.