Volatility is the rate of change. Lower volatility means lower rate of change. High volatility means that the rate of change is high. Volatility may also mean the average value of blur of the underlying asset price. In that case, it may be classified as implied volatility (expected volatility) or historical volatility (historical volatility). This volatility also relates to corporate M & A. In the case of corporate M & A, for example, if you acquire a place with high business performance and high brand value, the volatility of performance will be low. In that case, it will take some time to collect the purchase price. On the other hand, if it is possible to recover the performance with a steadily rising performance by acquiring the unfavorable performance at a cheap price and then raising the company as much as possible, the volatility of the performance will be high.
High volatility attractive to M & A pros
In corporate M & A it is thought that high volatility projects such as the latter case, that brings those with a loss in profit to the surplus are attractive projects. Investment funds and other specialized companies are familiar with finding such attractive projects and are gaining great benefits. In the past there was a M & A case with high volatility in Japan. It is a M & A case of mobile phone company. An IT company bought a mobile phone company that was a deficit by M & A. At that time the mobile phone company was in a state of rising rightwards, so its mobile phone company, which had been in the red after a few years, turned into a black surplus. After that, the mobile phone company increased its profit and increased its surplus. In this way, not only in the United States but also in M & A of companies in Japan, it is necessary to see the volatility. When considering M & A, you will need to look after the prospect of the rate of change of the company and investigate it fully.