M&A Mania Just A Sign Of The Times
from the it's-a-party dept
With so much talk about M&A these days, it's worth analyzing the conditions that are fostering this situation. It's not an easy question, since current market conditions aren't that different than they were a year ago, when there were a lot fewer deals. The Wall Street Journal tries to suss out a few reasons, including the continuing low interest rate environment (although they were lower a year ago), and a lack of regulatory obstructions -- there's a widespread sense that the DOJ has been rendered powerless to stop mergers ever since it failed to block Oracle's purchase of PeopleSoft. Still, these reasons don't seem robust enough to fully explain the spate of real or imagined dealmaking. The simplest answer may come from looking at the stock market. Take a look at what happened last Friday when rumor spread that Microsoft might buy Yahoo. While Yahoo's stock surged, Microsoft's stock barely dipped. In normal market conditions, you'd expect the announcement of a very risky, desperate-looking $50 billion acquisition to hit the acquiring company hard. The fact that it didn't suggests an unusually high amount of optimism. The fact that markets around the world are all pushing new records confirms that optimism is indeed widespread. So perhaps all of these deals aren't reflective of any significant economic shifts, but rather a lot of confidence than any investment, no matter how risky, will ultimately work out.
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M&A Mania
Microsoft, missed the boat with the Internet and specifically the portal business. Frankly have not had the success with MSN which they should have (failing to ever really capitalize on being the default setting on their browser.) RandomThought is also correct; they do not have a really successful ad business yet.
But what this is really about is the next generation desktop, which will be distributed via browser. Google has it, Sun has it, Yahoo + Microsoft might have it; though neither has really succeeded in developing this separately.
The days of the dominance and importance of the OS are waning and MSOFT needs to protect its flank.
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Podcast covering history of Private Equity/LBO
Recently Private Equity, or LBO as it used to be known, has become prominent again. There is an interesting podcast covering the history and reasons for the resurgence, which has a number of interview which expand on why M&A activity is increasing and why Private Equity is popular again.
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anything i do.. no matter how financially risky.. can work!!
umm.. can you say bubble!
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Maybe the mania is driven by the possibility of a change in regulatory climate in the near future.
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