Thursday, August 10, 2006

5 types of bad mergers (from Cramer)

1) Getting out while the getting is good: an M&A motivate by a seller who simply wants to exit the company, example: Sprint's (S) purchase of Nextel,
2) Don't just stand there, do something acquisitions: here a company doesn't know what to do, so it buys something, example: E-Bay's (EBAY) acquisition of Skype,
3) Panic and overpay acquisition: a company worried about slowing, borrows money to buy a company, example: EMC's (EMC) purchase of RSA Security (RSAS),
4) Two drunken sailors acquisition. Two underperforming companies try to combine, example: Alcatel (ALA) and Lucent (LU),
5) Napoleon complex: when a little company tries to buy a much larger company, example: Boston Scientific (BSX) vs. Johnson & Johnson (JNJ).

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personal development said...
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