The High Cost Of Synergistically Unlocking Shareholder Value

from the have-fun-with-it dept

Exactly a week ago, we wrote about the latest round of companies breaking apart to “unlock shareholder value” and noted that it often came very soon after the conglomerates were built on mergers that were talked up on “synergies” of having these companies together. We cynically pointed out that the real reason this happens is that Wall Street makes a lot of money on both ends. They get fees for merging companies, and for spinning off pieces. But how much? Business columnist Allan Sloan (who we doubt was inspired by our original piece, but we can hope) set out to find out just how much money is being paid to investment bankers for “advice.” He looks at two companies: Tyco and Viacom — both of which have bought a bunch of companies and recently spun off some companies as well, and figures that we’re talking about hundreds of millions of dollars. Different organizations he talks to give different answers, but it’s clearly an awful lot of money for the same bunch of advisors to basically tell these companies the exact opposite of what they told them a few months earlier.


Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “The High Cost Of Synergistically Unlocking Shareholder Value”

Subscribe: RSS Leave a comment
3 Comments
Howard (user link) says:

Typical

When GM bought EDS, and spun them off (at a “loss”) a few years later, they saved enough on reduced benefits for the workers that they transferred to the EDS division to pay for both transactions several times over, including the money that they paid Ross Perot to go away and shut up (neither of which he actually did). My guess is that a lot of “mergers” are done for hidden agendas.

Violins and accessories for sale

Derek Kerton (profile) says:

Re: Let us not forget

Let’s not forget that boards and top executives typically offer themselves “bonuses” and “incentives” for successfully completing a merger, or a divestiture. I never could figure out how selling a company merited a bonus, but apparently it’s quite an amazing accomplishment.

And, yes, Icahn is part of the Street.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...