M&A deals outperforming
What appears to be a flawed study suggests that recent M&A deals are outperforming the markets. From CBS Marketwatch
"In 2004, 7% of the transactions valued at $400 million or more resulted in companies that outperformed the stock market, such as the S&P 500 Index . The compares with merged companies underperforming the market by 3% in 1988 and 6% in 1998, findings by Towers Perrin and London's Cass Business School show.The study examined 218 global deals up to $1.5 billion. It analyzed company performance for a one-year period -- six months before and after the deal closing -- to determine the relative degree of financial success.
"In 2004, 7% of the transactions valued at $400 million or more resulted in companies that outperformed the stock market, such as the S&P 500 Index . The compares with merged companies underperforming the market by 3% in 1988 and 6% in 1998, findings by Towers Perrin and London's Cass Business School show.The study examined 218 global deals up to $1.5 billion. It analyzed company performance for a one-year period -- six months before and after the deal closing -- to determine the relative degree of financial success.
Towers Perrin and Cass said that the improved financial results are the result of management more closely aligned with shareholder interests, better selection of targets and an increased focus on integration. "
How about this better explanation: $1.5 billion is the realm of small cap stocks. The S&P 500 is an index of large cap stocks. Small cap stocks have dramatically outperformed large cap stocks for the past few years. How about comparing the results to the Russell 2000?
How about this better explanation: $1.5 billion is the realm of small cap stocks. The S&P 500 is an index of large cap stocks. Small cap stocks have dramatically outperformed large cap stocks for the past few years. How about comparing the results to the Russell 2000?
posted by The Accidental Consultant | 7:46 AM
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