EconAir

INTRODUCTION I was, for many years, in charge of finding and analyzing acquisitions for a large company.   Then, for two years, I was an independent merger broker and took part in negotiations. MERGERS AND ACQUISITIONS American corporations spend over $1 trillion a year buying other companies.   This is more than they spend on net new investment.   Even more than they spend on boxes at pro sports stadiums. Buying another company is a risky corporate strategy.   The few studies I have read indicate that 70-80% of acquisitions are failures.   They do not earn the acquirer’s opportunity cost of capital.   Many are a total loss and result in future write-downs.   This failure rate from published research is similar to the information I collected.   My department would use discounted cash flow/net present value analysis to determine the maximum price we would pay for an acquisition (the present value of the future net cash flo...

        INTRODUCTION   In 1600, England had been an insular and agricultural nation, trading primarily with nearby northern Europe. By 1700, England’s commerce was complex and global, as London competed successfully with Amsterdam for American produce and Asian luxuries.   Alan Taylor,   American Colonies:  The Settling of North America, 258.   A theme that runs through this essay is the global maritime rivalry with Holland. England and Holland became global trade rivals in the 1600s. They fought three wars that weakened Holland, eliminating it as a naval rival.    England’s main instrument in its rivalry with the Dutch in Asia was the English East India Company (EIC). In America and the West Indies, it was the Navigation Acts.   By the end of the century, England had become a global maritime trading and naval power. The Dutch had lost out in the Americas but had established a vast trading network throughout Asia, cen...