Walter Adams and James W. Brock, two professional economists, have produced a readable and very disquieting book that shows that mergers and acquisitions seldom work out.
In this gripping and alarming book, the world seems to have become a huge corporate game board for multi-billion dollar wheeling and dealing, merging and "unmerging." How is the game played? Who are the players? Who is winning? Who are the losers? Dangerous Pursuits answers these questions in an insightful manner and reveals the rules of the game: carefully crafted strategies, intricate legal maneuvers, and punishments for cheaters. It also captures the excited hoopla as the media follow each daring move and counter-move among the fighting corporate titans.
From the back cover blurb:
In this gripping and alarming book, the world seems to have become a huge corporate game board for multi-billion dollar wheeling and dealing. "Merging" seems to be the name of the game, or is it "unmerging"? Deals fuse billion-dollar corporations. Deals dismember corporate empires. It is a veritable feeding frenzy, a turning and churning of corporate paper that is diverting American entrepreneurship from the task of creating new wealth, new jobs, and increased competitiveness in world markets.
How is the game played? Who are the players? Who is winning? Who are the losers? Dangerous Pursuits addresses these questions in an insightful manner. With acerbic wit, it portrays the cast of players -- the outside raiders, the buyout wolves, the white knights, and the investment bankers who finance them. It reveals the rules of the game: the strategies carefully crafted in corporate boardrooms, the intricate legal maneuvers, the punishment for cheaters. And it captures the excited hoopla as the media follow each daring move and countermove among the fighting corporate titans.
From Henry Berry, Turnarounds and Workouts:
First published in 1989, Dangerous Pursuits – Mergers and Acquisitions in the Age of Wall Street analyzes central concerns raised by the flurry of mergers, acquisitions, takeovers, and buyouts as the twentieth century drew to a close. This was a period of great economic vitality that challenged conventional theories and practices. Economists battled over the best way forward. It was a period of time when “coalition capitalism” was offered as an alternative to “cowboy capitalism” – that is, the belief in economic laissezfaire. As set forth by the authors, “Coalition capitalism, grounded in ‘industrial policy,’ is the neoliberal Left’s riposte to the cowboy capitalism of the Right.” Coalition capitalism takes the approach that “planning can be used to improve [a country’s] market performance.”
The authors strive to present a balanced portrayal of the engineers of this economic growth – those individuals behind the mergers and acquisitions. To some, they were “predators, piranhas, greenmailers.” Others, however, see T. Boone Pickens, Carl Icahn, Ivan Boesky, and others as “necessary catalysts for shaking up stodgy managements and for restoring giant corporations to their owners, the shareholders.” Even the term “greed” is subject to debate. As a motivation for mergers, “greed is good” – as notably voiced by the character Gordon Gekko in the movie Wall Street – was an opinion apparently shared by Ivan Boesky, who told a college graduating class that “greed is all right.” On the other hand, Henry Kravis, a top Wall Street leveraged-buyout strategist is quoted as saying, “Greed really turns me off.”
In discussing the many opinions regarding mergers and acquisitions, Dangerous Pursuits gives the reader a complete picture of a time when the American economy, workplace, and society were transformed. But the authors make no secret that they are concerned that mergers are weakening American business and society. Their position is substantiated in chapters on the effects of mergers from a macro and micro perspective. In a chapter entitled “The Macro Record,” Adams and Brock step back from viewing mergers in terms of the parochial interest of the players and look at the “merger game” through the lens of the national interest. Shorn of media hype, the authors find that the “merger game” undermines advances in productivity, obstructs technological development, and weakens competitiveness. What the “game” does do is earn outsized, quick profits for the specialists, lawyers, financiers, and bankers who engage in it. In the chapter “The Micro Record,” the authors look at how mergers have affected particular airlines, steel companies, and conglomerates. From this micro perspective, they find that the benefits touted by those with “parochial interests” do not materialize.
At best, the mergers, acquisitions, takeovers, and buyouts are seen as impeding the economy from moving ahead. At worst, Taylor and Brock see an “addiction to mergeritis.” No one argues that mergers did not produce large profits for some. The authors warn, however, that such success is a “slow and secret poison” to the U.S. economy.
One-time President of Michigan State University where he also
taught, Walter Adams also taught at European universities, appeared as
an expert on economics before Congressional committees, and published
other books. James W. Brock has been a member of the economics
department faculty at Miami University in Ohio for more than 20 years,
and is the coauthor with Walter Adams on several books.
From Tom Peters:
Forget ideology. The hard facts add up to this: mergers and acquisitions seldom work out. Walter Adams and James Brock, two professional economists have produced a readable and very disquieting book.
From John Kennet Galbraith:
Anyone suffering a lecture on the benign wonders of the modern merger and takeover game should ask the speaker in a rude way if he has read this book.
From Book News, Inc.:
Adams (Michigan State U.) and Brock (economics, Miami U., Ohio) compared the practice to musical chairs—making profit by trading ownership rather than investing in new plants, research and development, or new capital formation—and warned that it was being played under clouds ominously heavy with national and corporate debt. The 1989 edition was published by Pantheon. Annotation ©2003
Walter Adams was Distinguished University Professor and past President of Michigan State University, where he taught for half a century before passing away in 1998. He taught on the faculties of the Universities of Paris and Grenoble, the Salzburg and Falkenstein Seminars, and the Industrial college of the Armed Forces. He frequently appeared before numerous Congressional committees; and in addition to scores of articles, he published a number of books including Monopoly in America and The Brain Drain.
James W. Brock is Moeckel Professor of Economics at Miami University in Oxford, Ohio, where he has been on the faculty for 24 years. He too has published in scholarly journals as well as testifying before Congressional committees, and co-authored a number of books with Professor Adams, including The Bigness Complex, Anti-Trust Economics on Trial, Adam Smith Goes to Moscow, The Tobacco Wars, and two editions of The Structure of American Industry.