Companies are like sharks

They either keep moving or they're dead (borrowing shamelessly from the old Woody Allen line). With the private equity boys cooling their heels, perhaps it's finally time for corporations to get into the M&A hunt. That's been the chatter for some time, a theory that's bolstered by a slowdown in corporate profits (S&P 500 companies are on track to grow just 1.9 percent during the third quarter, the slowest pace in more than five years). If companies can't grow on their own, the thinking goes, they'll need to acquire other companies - the old "grow or die" theory of profitability. Anyway, BW's Steve Rosenbush mulls over the prospects, citing M&A advisers who have detected a shift in their business towards corporate buyers.

"Our private equity pipeline has slowed. All of a sudden we're seeing strategic buyers who want to look at deals," says Bob Profusek, head of the M&A practice at global law firm Jones Day. U.S. private equity buyouts totaled $33.3 billion in September, down 27%from $45.6 billion in August, according to researcher Dealogic. The corporate world has the resources to support a big boom in M&A, should management choose that route. Earnings growth may be weak, and consumers may be drowning in debt, but corporate balance sheets are in stellar shape. Companies are flush with cash and operating at historically low levels of long-term debt.

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There's some risk in a rush to M&A. Savvy buyers do deals on a steady basis, not just when business conditions are weak, says Donald Marron, chairman and chief executive officer of private equity firm Lightyear Capital. A sudden wave creates a risk that companies will pursue bad deals just to goose earnings. Marron, a finance veteran who ran PaineWebber and UBS America after PaineWebber's acquisition by UBS (UBS), also says it's possible that the economy will prove more resilient than some people think, which might make it easier to boost profits without M&A.