The CMA Will Definitely Clear This Merger

An investor tells me with certainty that, if the high profile deal in which he is interested happens, the CMA will definitely clear it.

“They (the acquirer) wouldn’t go ahead if they weren’t absolutely sure they could get it through”, he insists.

It’s a view that I’ve heard many times during my investor briefings on mergers from supermarkets to video games.

It’s a bold claim.

Which is why – when it crops up – I usually find myself asking briefing participants the following:

What would have to be the case for it to be true?

What would have to be true for this to be the case?

At which point participants to the discussion tend quickly to alight on three big assumptions:

1. That the acquirer has prepared perfectly for all eventualities

2. That none of the eventualities results in any risk whatsoever that the CMA will find competition problems.

3. That this acquirer would only proceed with absolute certainty of outcome.

When that happens discussion often then turns to how frequently these assumptions have held in similar past cases.

Quite a lot is known about that, under all three headings.

And when that is discussed, guess what tends to happen next.

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