Businesses in the U.S. have had to cut costs in many ways to keep afloat in the downturn. For some of them, the most critical approach has been the slashing of production. In the place of so many new goods, approximately $207 billion in existing inventories were allowed to deplete during the lull in consumer demand. Fortunately, though, the tide seems to be turning, and production is rising again. As the fourth quarter of 2009 began,...
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Factoid of the Week
03/05/2010
An archive of AxSA's publications. Note that these publications are also available for download in PDF format in the Library section.
Friday, October 16, 2009 - 1:05pm
For Cash-strong Businesses, the Acquisition Question
In these turbulent economic times, there are two immutable certainties. The first certainty is that cash is king. Now, to be sure, it should be noted that cash has actually always been the king, even though debt and inflated asset valuations may have made their own good, albeit impractical, runs at overthrowing the kingdom. And the second certainty is the mergers-and-acquisitions practice, at least as we have known it, is now a badly wounded beast.
The latter certainty was evidenced in a recent Wall Street Journal article written by Matthew Karnitschnig. There, Karnitschnig began with an ominous declaration: “M&A is almost dead.” And though his words seem hyperbolic, he went further to point out that “…the severity of the current downturn and the disappearance of credit is changing how Wall Street puts deals together.”
Of course, the Karnitschnig prediction could be dangerously premature and, if nothing more, only applicable for the duration of this downturn.
Nevertheless, his words highlight an important point about the nature of our modern M&A arena. For years now, particularly since the...
Thursday, October 15, 2009 - 7:40pm
Not all that long ago, Mashoud Rashama was living the best life that a meticulous and successful, Wall Street quantitative trader could afford, but since the onset of the 2008 financial meltdown, that has not been the case. Mr. Rashama was among the thousands of financial workers who found themselves unemployed as their seemingly venerable firms either collapsed or were consumed in the closing months of the year. The aftermath of those events and his own layoff were beginning to take its toll on him. “I would only say that it’s been surreal,” he explained in a telephone interview. “I found myself waking up in the middle of the night, almost too scared to face the day ahead...” Fortunately, Mr. Rashama was not without resources, and that meant that he had options.
Said Mr. Rashama, “There was not really a question about capital—or one about talent. Once I finally realized that this was possible, I took a very deep breath, and I decided to start my own fund.”
Mr. Rashama is among the hundreds upon thousands of Americans who are pursing their dreams either as self-employed individuals or the owners of new, start-up ventures, a group that the Wall Street Journal...