Here’s a question I have for all the students and fans of M&A alike: Why now, and not two, three, four years ago?
How much of the process of merger and acquisition is ego driven, psychology, sentiment — and how much of it is legitimate, intelligent strategy?
Recall that in 2001-03, there were a dearth of deals. Any buyers back then were getting bargains galore, at rock bottom prices, when the rest of the world HATED DEALS. Now, acquisitive corporate managements are paying premium prices, as profits decelerate and the economy slows.
Isn’t it better to buy low and sell high?
Many of the deals we have seen have been all cash tenders; That’s not like Google taking advantage of their high share price to acquire YouTube for essentially free.
Whenever we see a massive spasm of acquisitions, it makes me wonder what is it really that is driving the deals — especially considering that these purchases could have been made for pennies on the dollar a mere three years ago. Back then rates were even lower, China was still growing at 10% year-over-year, taxes were low.
Why the rush to acquire? Is there that much cash around? I don’t believe its the regulators taking a nap; There is much more to this wave than merely that.
Where are the Benjamin Graham aficianados? What say the value players?
When you see Warren Buffett talking about a $40 billion to $60 billion goal for a single purchase, spending his huge cash hoard he took decades to acquire — despite having one of the worlds most valuable currecnies — it makes you wonder if everyone has taken leave of their senses . . .
Buffett’s Quandary, M&A Case Study, Sotheby’s Surge
Bloomberg, May 8 2007
As Deal Barriers Fall, Takeover Bids Multiply
Regulators and Size Pose Less of a Problem;
‘Nobody Is Off Limits’
DENNIS K. BERMAN in New York, JASON SINGER in London and JOHN R. WILKE in Washington
May 8, 2007; Page A1
Another guest musical director for FNJ this week: Eddie Elfenbein of Crossing Wall Street on Artie Shaw. Take it away, Eddie:
Artie Shaw was cool. Not Elvis cool or Sinatra cool, but a darker, more subdued cool.
What Shaw did was make things look easy. Check out this clip and notice how, even after six decades, his music hasn’t aged a bit. It’s still fresh and smooth. It’s just…cool. (You gotta love Shaw’s reply to the compliments: “Yeah, yeah. Glass of water.” Pure cool.)
Artie Shaw was the very last of the big bandleaders. He died a year ago at age 94 and fifty years after his last performance. He wound up outliving all the greats—Goodman, Herman, Miller. Those names may loom larger today, but back then, Shaw’s star was the brightest. He was making $60,000 a week—not bad for the Depression. With America poised to enter World War II, Time magazine reported that Germans’ vision of America was “skyscrapers, Clark Gable and Artie Shaw.”
Fascists, apparently, have issues with tall buildings.
When Shaw hired Billie Holiday, he became the first white bandleader to hire a full-time black singer. But Shaw detested the limelight. In fact, Shaw hated the words “jazz” and “swing.” No, he considered himself a musician. He hated the audience. He hated the singers. He hated the dancers. He hated other bandleaders (“Benny Goodman played clarinet. I played music.”)
By 1951, Shaw walked away from music altogether and became—what else?—a dairy farmer. Crazy, maybe, but cool in its own way. Duke Ellington told him, “Man, you got more guts than any of us.”
So what did Shaw like? Women. Lots and lots of them. He was married eight times. He nabbed Betty Grable which would have pleased most men. Not Shaw. While they were engaged, he ran off with Lana Turner. (Whoa, Duke was right!) Shaw had an affair with Rita Hayworth. He dumped Judy Garland. He married Ava Gardner before Sinatra. How in earth did he have time enough time for music?
Ah, the music. Brilliant. Here’s an example: In 1938, Shaw took an obscure and forgotten Cole Porter song and made it a jazz classic. Have a listen to “Begin the Beguine.”
If you’re keeping score, that’s a Jewish bandleader playing Negro music written by a homosexual.
Exceedingly trivial trivia: “Begin the Beguine” has been performed a gazillion times since. In the movie, The Rocketeer, it’s performed by Melora Hardin, who’s better known as Jan in The Office. (Told you it was trivial.)
If you’ve never heard of Shaw and want to get your feet wet, I’d recommend: The Very Best of Artie Shaw
That pretty much has it all. Personally, I love “Star Dust” and “Deep Purple.” Wonderful stuff.
BR adds: Thanks Eddy — nicely done. There is a terrific recording of Shaw over at NPR: Performance by Shaw of Shaw’s 1940 Concerto for Clarinet
videos after the jump . .