Chris Blackhurst: Money-men are sitting on their hands – where are all the deals?

Midweek View: In the febrile atmosphere engulfing us CEOs would rather do nothing than risk public opprobrium

Where have all the mega-deals gone? Not so long ago, there were agreed bids galore and the occasional hostile one, to whet the appetite – and to keep the City advisers' fees turning.

We're now living through a period of prolonged drought, so much so that one very senior financial PR chief was overheard recently describing his agency, which grew up entirely on the back of M&A, as a firm specialising in "crisis management". I found it hard not to laugh at the thought of the smooth Henrys and Poppys on his workforce suddenly having to acquaint themselves with the murky practices of the tabloids, and the tricky task of repairing the damaged reputations of captains of industry.

But needs must. He was having to change the pitch of his business in order to survive – if he stuck to the original reliance on takeovers it would surely die.

That move is being repeated all over the City. Apart from Vodafone, the cupboard is bare of the big-ticket stuff, the ones with the numbers that really set pulses racing.

It's easy to understand the corporate psyche, that ever since Lehman went down five years ago, we've been living through a period of pronounced depression, uncertainty and volatility. It would be foolhardy in these conditions to make massive plays. After all, one of the last CEOs to flex some muscle before the crash was Fred Goodwin at Royal Bank of Scotland, fighting to buy ABN Amro, and look what happened to him.

The euro crisis is far from over, just having a holiday while diplomatic and political attentions are focused on Syria; and nobody knows what effect an American missile strike would have on the region, the world and therefore on the markets.

No, it would be crazy in this climate to commit to heavy spending and leveraging. It's not just deal making that is suffering. Companies are holding back from investing organically as well. There are signs of economic recovery, yet so far there have been few announcements about individual development and expansion plans.

It's not as if there is a shortage of funds. Analysis by Capita Asset Services suggests that the amount of cash held on balance sheets by the UK's largest companies by stock market value has reached an all-time high of £166bn – gross cash balances for the FTSE 100 have risen from £123.8bn in 2008.

Is there more to this than meets the eye? What's especially telling is that corporate treasurers are even unwilling to buy government bonds. That has to say something about their lack of faith in the robustness of the UK – that despite the appearance of green shoots, the economic outlook remains distinctly fragile. It also provides evidence that quantitative easing has failed. If they believed in QE's ability to supply a lasting stimulus, they would have bought bonds. As it is, they've sat on their hands.

Those corporates, make no mistake, are also increasingly fed-up. There is a growing sense of frustration at the ease with which other companies, those based offshore, are able to operate relatively free of restrictions, without penalty of tax.

Simply, they can't compete on the same terms. Unless it is a copper bottomed agreed deal, they are afraid of finding that if they break cover with any announcement, a bigger, more flexible third party will pounce.

You saw it with the Vodafone sale of its Verizon stake. No sooner was the plan disclosed than politicians were complaining loudly that Vodafone was avoiding paying tax on its £84bn proceeds.

In the febrile atmosphere currently engulfing us, chairmen, CEOs and boards do not need this sort of controversy. They would rather not do anything at all than risk public opprobrium.

But apparently the Treasury is not content to let them do nothing. The inactivity and the rising mountain of cash have led to talk of a "win- win" in Whitehall. The Government could threaten to tax the pile as a windfall tax. It's in desperate need of the money, so company cash balances could be regarded as a legitimate target.

That's one win. The second is the effect the prospect of such a tax might have on the companies. It could force them to get off the fence and spend, which may be good for the economy.

I have my doubts. My bet is that they would look to take their cash offshore or mask it via some skilful financial engineering. Companies don't like being told what to do any more than they like paying tax.

Suggested Topics
News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
PROMOTED VIDEO
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
News
i100
News
peopleFox presenter gives her less than favourable view of women in politics
News
Mario Balotelli has been accused of 'threateningly' telling a woman to stop photographing his Ferrari
peoplePolice investigate claim Balotelli acted 'threateningly' towards a woman photographing his Ferrari
Arts and Entertainment
Paul Anderson plays Arthur Shelby in Peaky Blinders series two
tvReview: Arthur Shelby Jr seems to be losing his mind as his younger brother lets him run riot in London
Voices
Don’t try this at home: DIY has now fallen out of favour
voicesNick Harding, who never did know his awl from his elbow, is glad to see the back of it
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Saw point: Bradley Cooper and Jennifer Lawrence in ‘Serena’
filmReview: Serena is a strangely dour and downbeat affair
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
Arts and Entertainment
A shared vision: Cerys Matthews has been familiarising herself with Dylan Thomas’s material, for a revealing radio programme
arts + entsA singer, her uncle and a special relationship with Dylan Thomas
News
In other news ... Jon Snow performed at last year's Newsroom's Got Talent charity event
people
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years