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Big Deals Are A Big Deal Again

11/16/2010

Mergers and acquisitions are back in style as companies start investing “hoarded” cash.

From Caterpillar to Chevron to Google acquisitions are being made at a pace that’s nearly 30% greater than 2009. Almost all of the deals are companies buying other companies. Private equity firms represent only 8% of the buys compared with 23% in 2006.

For example 3M Co., makers of Scotch Tape and Post-It Notes, is on a buying spree. 3M intends to spend $2 billion on acquisitions this year ranging from Ross Reels, a manufacturer of fly fishing reels, to Arizant, a maker of medical products. Google has made 20 acquisitions this year compared with 8 last year. Their buys have focused on areas like smart phones and social networking.

Mergers and acquisitions always, and I mean always, create challenges for the acquired company. Differing views on sales, costs and marketing emerge. The big deal in M & A’s is not just the buying – it’s the building, growing and leveraging. 2011 is certain to be a big deal for the acquired companies as they get to know their new keepers. I hope 2011 is a big and good deal for them.

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