The M&A effect, updated

I don’t think anyone, outside of the business itself, has yet really understood the implications to Bermuda of the spate of M&As within the IB sector here.

While mergers and acquisitions have been predicted for some time, it is only really now that we are seeing them actually happen.

Do we really understand the implications of the mergers?
Do we really understand the implications of the mergers?

We have not yet directly seen the consequences, but we will in a few months when high-earners are laid off and offices become empty.

There will be millions of dollars less entering the economy whether through grocery shopping, rents and ancillary services such as carpet cleaning which are no longer required.

IB was the pillar many of us leant on as tourism declined. The problem is, as the IB pillar shrinks tourism is not increasing enough to pick up the slack. There is no third pillar on the horizon to come to the rescue.

I don’t know what the solution to this is as Bermuda is really not able to indulge in manipulation of the economy as other larger countries can.

It certainly puts more urgency on a recovery in tourism as well as investigating new technology-based industries.

UPDATE: a friend posted this on my FB page: “In the past it’s been cyclical. As I understand it, more M&As happen in a soft market and then new companies form as the market hardens after a major event. The problem for Bda going forward is that there is more jurisdictional competition for new business now. Whatever your opinion on term limits, it certainly had a negative effect on the IB sector.”

5 thoughts on “The M&A effect, updated

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  1. And in today’s paper notice of two companies, PX Re and one other effectively surrendering their license.   Sent from my BlackBerry 10 smartphone. From: Bermuda BlueSent: Monday, February 16, 2015 1:51 PMTo: capsule@logic.bmReply To: Bermuda BlueSubject: [New post] The M&A effect

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    Bermuda Blue posted: “I don’t think anyone, outside of the business itself, has yet really understood the implications to Bermuda of the spate of M&As within the IB sector here.

    While mergers and acquisitions have been predicted for some time, it is only really now that w”

  2. and more to come. The net job losses might be in the hundreds. Add that to a relatively stagnant economy in which businesses are hanging on, and have been hanging on for several years for a better day, does not bode well. AC will only cushion the loss. If we only lose 100 jobs at an average of 100-120k a year , thats 12,million in revenue lost from the economy. Thats a lot of rents, groceries, schools and business spending and so on, so its worth more than 12 as its circulates. Thats the kind of money that goes directly into the local economy and local pockets. Term limits were a problem, now industry capacity is another. I can only hope our finance minister has baked in a declining tax base and lower revenue basis on his budget for next year, otherwise we’ll be in for another 250 million deficit, which puts us in immediate layoffs in all public sector services. Barbados comes to mind. Then a devalued dollar starts to become an issue. People and businesses are already moving their local savings into US dollar accounts. What does that tell you about their confidence, which again in turn hurts the spending. Its a bad spiral, and once it starts its damn hard to stop. So, realizing we are already in that spiral paradigm is critical for our country to understand as a whole.

    let us pray.

  3. “is critical for our country to understand as a whole.”….. did you pay attention to the rhetoric during the recent 3 day strike? it’s not going to happen, even if you burned the message into their brains with a blow torch.

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