The hottest Mergers Substack posts right now

When a company buys another, they usually want to control it better, believe it’s undervalued, or expect to create synergies. Understanding these reasons helps in assessing a merger's potential success.
Synergy can mean combining strengths for better growth, but it requires careful planning and true benefits to actually work out. Just hoping for it isn't enough.
Sometimes even smart businesses can overestimate the benefits of a deal. It’s important to look closely at the numbers and not just rely on excitement or confidence.

Companies often buy other businesses to prevent competitors from gaining an edge. This strategy, called defensive dealmaking, can sometimes be risky and expensive.
For a defensive acquisition to be worth it, the company must be valuable, the threat must be real, and the deal should be the most cost-effective option.
It’s not always the best idea to act quickly just because others might; sometimes doing nothing is the smarter choice and can save a lot of money.

Comcast's bid for Time Warner Cable raises questions about whether the merger will truly benefit both companies. It seems there may be some potential for synergy, but it could be limited.
The initial market reactions suggest mixed feelings about the deal, with Comcast's stock dropping. This could indicate doubts about future growth or regulatory hurdles.
Even small improvements from the merger can add value, but achieving those improvements may require significant effort and time from Comcast's management.

Acquiring smaller companies tends to lead to better success than merging with larger ones. Smaller targets usually come with less integration issues.
It's important to assess the true value of a target company before making an offer. Paying too much can ruin a good acquisition, so understanding what you're paying for is key.
Having a solid plan for after the acquisition is crucial. Integration needs resources and clear strategies for success, or the deal may not work out.

Goodwill on balance sheets can confuse investors because it doesn't really represent an actual asset. It basically acts as a placeholder that can mix a lot of different values together.
Changes in accounting rules made it harder to compare companies that do acquisitions with those that grow internally. This makes it tricky for investors to understand a company's real value.
Impairments of goodwill can impact stock prices, but they also create more confusion in financial reports. This could mean that investors are often surprised by these impairments long after the acquisition.

Get a weekly roundup of the best Substack posts, by hacker news affinity:

Accretive deals are not always good; it depends on the earnings and risks of the companies involved. Just because a deal raises earnings per share doesn't mean it will help the stock price.
Dilutive deals can also be beneficial if the acquired company has better growth potential or lower risk. Sometimes, risks from a lower-quality target company can hurt the combined firm's value.
Market reactions to accretive and dilutive deals don't always align with assumptions. The market may not reward or punish these deals in the expected way, making the traditional analysis less useful.

Acquisitions often don't benefit the buying company. When companies acquire others, their stock prices usually drop rather than rise.
Most acquiring companies struggle to perform better after merging compared to their peers. Studies show a majority underperform in terms of profitability and stock price.
Growth through acquisitions is often less effective than other strategies. Companies can create more value by developing new products instead of buying other companies.

HP had a huge loss of $8.8 billion from buying Autonomy, which was a large part of the money they spent. This was mostly due to dishonesty in Autonomy's accounting practices.
The market was really surprised by HP's announcement of the loss, and their stock dropped quickly. Usually, companies' losses from bad deals aren't a shock to investors, but this was a standout case.
Many people involved in the deal are blaming each other for the mess. This highlights the problems in making big mergers and how important it is to have trust in financial reporting.

Mergers can impact innovation and economic growth in both positive and negative ways. A balanced approach to merger policy is needed to encourage growth while keeping competition healthy.
It's more important for merger policies to focus on making it easy for new companies to enter markets rather than just preventing big companies from merging. Low entry barriers help maintain competition over time.
Using price-based rules for approving mergers can lead to better outcomes than just focusing on market concentration. Keeping an eye on price changes allows for more flexibility in allowing mergers without harming consumers.