Strategic Corporate Alliances: A Study of the Present, a Model for the Future

Strategic Corporate Alliances: A Study of the Present, a Model for the Future

Strategic Corporate Alliances: A Study of the Present, a Model for the Future

Strategic Corporate Alliances: A Study of the Present, a Model for the Future

Synopsis

This volume takes a critical look at the various forms of corporate restructurings prevalent today and at their longterm implications for the structure of corporate America. Nevaer and Deck analyze the opportunity costs being incurred by both individual firms and the entire nation through the wave of takeover activity in the 1980s, demonstrating that the large debts taken on by corporate America to either finance or fend off takeovers has hampered America's ability to compete effectively in world markets. They then identify the essential criteria for a truly successful alliance, merger, or acquisition and suggest models for such restructurings in the future.

Excerpt

The level of merger and acquisition activity in the United States has been increasing every year at an alarming rate. The success rate, however, has not; it still remains at dismal levels. Through a combination of buybacks and spinoffs, mergers and acquisitions, LBOs and recapitalizations, the structure in which corporate America operates has been permanently changed. Not since the turn of the century have we seen such action, when J. P. Morgan merged three industrial empires into the world's first billion-dollar corporation, U.S. Steel. In 1986 alone, there were thirty-eight mergers or acquisitions of $1 billion or more, with the largest being Kohlberg Kravis Roberts' $6.3 billion leveraged buyout of Beatrice Foods. Again, not since the turn of the century have we seen such volatility. In fact, in 1989 alone more than 4,000 of America's largest companies spent over $200 billion to either merge with or acquire other companies or to fend off acquisition attempts. This is over four times the amount spent in 1983, and this amount continues to rise each year (see Figure 5).

The power in corporate America has shifted from the corporate executive suite to Wall Street. This restructuring is so severe that it could generate the type of political and economic turbulence that is usually associated with a severe economic crisis. No longer is the United States the leading economic force in the world. Japan has recently emerged as the first major economic . . .

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