MacFadyen: Yankees and M&A
November 9, 2009
Most major sporting events tend to spawn one of those random stats, identifying that every time Team A wins, the stock market follows with either a good or bad year.
I've worked with enough numbers to know you can pretty much manipulate them to say whatever you want. With that in mind, I set off to find a stat to prove that a Yankees championship is good for the deal market. (Full disclosure, I bleed pinstripes.)
Unfortunately, I discovered a couple things. One, it's a lot easier to find historical data on the stock market than it is for domestic M&A. Our numbers expert here warned me that Thomson Reuters' data only went back to the Jack Clark era. That didn't bode well.
The data actually went as far back as the Winfield era, starting in 1981. The numbers, though, weren't exactly accommodating. For the past 28 years, every time the Yankees won the World Series and a position player was named the MVP, the total number of deals declined in the following year. For those non-baseball fans out there, World Series MVP Hideki Matsui is an outfielder.
For those who thought Rivera was more deserving, it might pain them to know that every time the Yankees won and a pitcher was named most valuable, the total deal volume grew.
Still, things could be worse. Two of the last three Red Sox Championships preceded our current credit crisis and the Great Influenza Outbreak of 1918, which without data I'm going to take a leap and say was a bad year for M&A.
We've written before about how acquisitions provide the perfect opportunity for rivals to act. I think we saw this taken to a new level in November, when RightNow Technologies issued a press release offering Kana clients free migration services "as an alternative to the uncertain future they face as a result of its acquisition by Accel-KKR."
The Kana transaction was an interesting one, but from what I can tell, I'd venture that Accel-KKR's investment actually removes some of the uncertainty. RightNow, though, seems to be playing into the newfound fears of buyouts, identifying early on that Accel-KKR is a technology private equity firm.
RightNow, meanwhile, formerly resided in the portfolio of Summit Partners before going public in 2004.
I find myself going back and forth on the whole compensation question. My first instinct is for unfettered capitalism. Then I read something absurd that annoys me enough to backtrack.
Credit goes to Lloyd Blankfein for my latest change of heart. He was the subject of a glowing(?) profile in the Times Online. Here is his response to the question: Is it possible to make too much money?
"Is it possible to have too much ambition? Is it possible to be too successful... I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation."
I realize that I'm on record stating Goldmanites shouldn't bother being discrete about their wealth. But when their CEO goes out and calls the job "God's work," whatever the context, it starts to crystallize for me why a paycheck exceeding $50 million is a problem.
The DealBook had a quick blurb on Steven Begleiter, the Bear Stearns vet who came in sixth in the World Series of Poker Finals.
His failed $22 million bet, the DealBook wrote, "eerily parallels the fate of financial firms on Wall Street that bet big with their client's money and lost, but still ended up with a large chunk change in their pocket."
That was mouthful, but it made me realize how bad those guys actually have it. It's like that scene in the Naked Gun where everything starts to remind Dreben about his ex.
Dick Fuld calls Verizon for a Blackberry on the fritz, and suddenly the customer service rep, in their ineptitude, draws parallels to Hank Paulson.
Jimmy Cayne slices into the woods, and in an instant everyone is reminded of those doomed Bear Stearns hedge funds. (His caddy won't want to mention this.)
G. Kennedy Thompson buys a bed-bug infested chair at a yard sale and his wife sees fit to bring up Golden West all over again.
And all these guys, just a few years ago, were doing God's work. Funny how those things work out.
The ongoing fight between CF Industries, Terra Industries and Agrium remains one of the more compelling M&A stories this year. The standoff, which sort of resembles the end of Reservoir Dogs, has Agrium looking to buy CF through a hostile bid and CF taking the same approach in an attempt to buy Terra.
The DealBook's Steven Davidoff, the Cris Collinsworth of M&A, has a great rundown of the deal. It's definitely worth a read.
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