读书笔记：Mergers & Acquisitons from A to Z

During the 1980s, nearly half of all U.S. companies were restricted, more than 80,000 were acquired or merged, and over 700,000 sought bankruptcy protection in order to reorganize and continue operations. The 1980s featured swashbucklers and the use of aggressive tactics to gain control over targets. The 1990s were equally dynamic in terms of companies evolving through upsizing and growth, downsizing, rollups, divestitures, and consolidation, but focused on operational synergies, scale efficiencies, increases in customer bases, strategic alliances, market share, and access to new technologies. This period, however, came to a crashing end with the bursting of the tech bubble and the global recession that followed. 

The wave of M&A activity seen from 2004 to 2007 was driven by the more general macroeconomic recovery and several key trends. First, many companies had exhausted cost cutting and operational efficiencies as a means of increasing profitability and were looking to top-line growth as a primary enabler of shareholder return. The increased pressure to grow turned the spotlight on the opportunity to achieve growth through acquisition. Second, the M&A market had been supported by the return of corporate profits and, with them, improved stock price valuation. The improved valuations enabled corporations to leverage their internal currencies to acquire target companies that were willing to swap their illiquid private stock for valuable public-company shares. Third, interest rates were hovering at historical lows, enabling firms to cost-effectively utilize debt to finance acquisition-based growth.

From 2008 to late 2009, the most recent wave of M&A activity was driven by weak economic conditions around the globe. The strong, cash-rich companies and firms began bargain shopping, picking off distressed and downtrodden competitors at a fraction of their market value compared to expectations just a short 12 to 18 months earlier. Large and midsize companies began to refocus on their core business lines, triggering divestitures and spin-offs of underperforming divisions or subsidiaries. Private equity firms and even hedge funds, under pressure to provide returns to their limited partners, turned stepchild investments into small buckets of cash in order to hold off a tyranny or management overthrow.