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 (minus data center 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 v...

Famous Headline Before You Begin If you don't know the background of this complicated story, you might want to first read a shorter version that introduces some of the key factors explaining the Crash and the Depression. See, Introduction to the Stock Market Crash of 1929 and the Beginning of the Great Depression Before reading this essay, I strongly recommend you see the PBS video on YouTube. Type in Stock Market Crash 1929. Look for US – The Crash of 1929 (PBS), ALLHISTORIES – PLAYLIST.  Documentary broken into 6 parts to show commercials. Or buy the video on Amazon Prime. Great documentary with wonderful photos, videos, and scenes from movies of the 1920s and the crash. Shows what a crazy time it was. The video is also a great introduction to Andrew Ross Sorkin, 1929:  Inside the Greatest Crash in Wall Street History - and How It Shattered a Nation.  This book concentrates on the roles played by a small number of key men; the video also focuses on these me...