"Merger activity will get
a much-needed lift when companies realize that acquisitions are the only way to
expand in a slow-growth economy."
"M&A has long been a
business that runs on optimism. The effort required to buy another organization
— negotiate a price, perform effective due diligence, resolve legal and
regulatory requirements and defeat other bidders — is daunting and
time-consuming, high drama and remarkable tedium. The machinery of M&A is
large, complex and fragile, a fluid constellation of bankers, lawyers, accountants,
consultants, corporate executives, directors and investors of all kinds. It is
both a mechanism of change and an intricate set of financial, organizational
and legal technologies. Perhaps the greatest and most commonly overlooked
aspect of M&A happens when the deal is done: postmerger integration, or
effectively knitting two corporate entities into one.
None of M&A is easy, and
the risks are considerable — too large, apparently, for many companies still
focused on disaster and seemingly content to accumulate cash, passing some of
it to shareholders when they grow restive. This is a big change. The modern era
of M&A, which began in the mid-’70s and was characterized by shareholder
governance and deregulated markets, has been both cyclical and expansionary.
Recessions reduced the size and number of M&A deals for two or three years
only to see them roar back, each wave mightier than the last. What drove those
successively higher waves was the expansion of M&A into the middle market
and into the developed, then emerging, economies. Throughout this period
M&A was broadly tamed and routinized, moving beyond an activity that once
seemed to belong to cowboys, pirates or, most famously, barbarians."
