7 reasons why Allied's deal will succeed

There will be plenty of naysayers telling Hanover investors why they should tip the company into receivership (most of them funnily enough with first names starting with B). I thought I’d give you seven reasons why the deal will go ahead.

1. No one likes admitting to failure. Investors have shown they are reluctant to put a company they backed under. It’s like they are admitting they made a mistake. Remember the majority of investors who put their money into Hanover and United did it off their own volition – not through advisers.
2. They voted in hope for the moratorium and they will do the same again with Allied Farmers.
3. It’s a way of saying goodbye to Hanover shareholder Mark Hotchin and Eric Watson. Nothing like a public humiliation to make one feel better.
4. Instead they replace them with the new Mr Nice Guy Rob Alloway.
5. At least it’s a way out. Currently investors are stuck in the moratorium. They can’t do anything and it seems Hanover is pretty hamstrung too.
6. Allied Farmers needs the deal as much, if not more then Hanover. Remember they are the ones who initiated it. They need the capital and the size. Without this deal its future in the finance business is less than rosy.
7. Investors with a medium to long term view may well see the deal stacks up. Hanover’s books don’t look particularly good in the light of the today’s economic environment. But markets go in cycles and no doubt somewhere, sometime the picture could well change.