As valuations get depressed in the slowdown, it’s time for the big corporate sharks to be on the prowl. But does unity in the ‘fall’ing part of the economic cycle actually bring prosperity or peril? An exclusive B&E analysis...
How would you identify the CEO in any organisation today from the rest of them? Silly question, right? He has to be the guy with the giant pair of scissors, of course! For what else is a CEO expected to do in a recession, other than cut corners?
Now if that’s the view you have been holding for all this time, we do not exactly blame you, for you have been exposed, for the past several months, to the current gloomy travails of companies like GM, Ford, Citigroup, Hitachi, Caterpillar, Sony, et al. Indeed, there have been numerous reports of these and many other companies engaged in various forms of cost cutting; be it layoffs, plant shut downs, store closures, salary cuts, or hiring freeze. Even advice has been a casualty! An old friend we met recently, who works in a reputed consulting firm, lamented how companies cut down heavily on investments in consulting projects in a downturn.
So then, mention the word M&As, and you would wonder which planet we are talking about! Indeed, corporate exuberance for takeovers has declined. Data from Dealogic shows that global M&A deal volume reached $3.3 trillion in 2008, which was 28% down from the value in 2007. And it is interesting to have a perspective on what could have been, since a massive 1,362 M&A deals were withdrawn in the year, totaling $923 billion. These were led by the proposed acquisition of Rio Tinto by BHP Billiton, which was valued at a huge $147.8 billion. Marius Kloppers, CEO, BHP Billiton had said on the withdrawal announcement in November last year, that although the deal was still compelling due to similar cultures and overlap of key assets & infrastructure, “recent global events and associated fall in commodity prices have altered risk dimensions.” That’s predictable, right? Another most prominent withdrawn deal that made headlines was the proposed Yahoo! acquisition by Microsoft, which, also led to another withdrawal; that of Yahoo! Founder and CEO Jerry Yang, for shareholders were not exactly overjoyed by the way he rejected the $31 a share deal, for a stock that closed at $13.42 on March 18, 2009!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
How would you identify the CEO in any organisation today from the rest of them? Silly question, right? He has to be the guy with the giant pair of scissors, of course! For what else is a CEO expected to do in a recession, other than cut corners?
Now if that’s the view you have been holding for all this time, we do not exactly blame you, for you have been exposed, for the past several months, to the current gloomy travails of companies like GM, Ford, Citigroup, Hitachi, Caterpillar, Sony, et al. Indeed, there have been numerous reports of these and many other companies engaged in various forms of cost cutting; be it layoffs, plant shut downs, store closures, salary cuts, or hiring freeze. Even advice has been a casualty! An old friend we met recently, who works in a reputed consulting firm, lamented how companies cut down heavily on investments in consulting projects in a downturn.
So then, mention the word M&As, and you would wonder which planet we are talking about! Indeed, corporate exuberance for takeovers has declined. Data from Dealogic shows that global M&A deal volume reached $3.3 trillion in 2008, which was 28% down from the value in 2007. And it is interesting to have a perspective on what could have been, since a massive 1,362 M&A deals were withdrawn in the year, totaling $923 billion. These were led by the proposed acquisition of Rio Tinto by BHP Billiton, which was valued at a huge $147.8 billion. Marius Kloppers, CEO, BHP Billiton had said on the withdrawal announcement in November last year, that although the deal was still compelling due to similar cultures and overlap of key assets & infrastructure, “recent global events and associated fall in commodity prices have altered risk dimensions.” That’s predictable, right? Another most prominent withdrawn deal that made headlines was the proposed Yahoo! acquisition by Microsoft, which, also led to another withdrawal; that of Yahoo! Founder and CEO Jerry Yang, for shareholders were not exactly overjoyed by the way he rejected the $31 a share deal, for a stock that closed at $13.42 on March 18, 2009!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
Read these article :-
Outlook Magazine money editor quits
Don't trust the Indian Media!
No comments:
Post a Comment