Attached is a recent American
Banker article. The idea is that M&A waves follow major legislative
changes which change the rules of competition. The current changes, similar to
those in the 1990s, have or will trigger consolidation waves, which is
particularly well suited to M&A. Yet, bank M&A remains modest. One of
the reasons for the weak volume is many bankers still believe M&A is a
mug’s game. The problem with assuming all M&A is bad is it assumes managers
are either stupid or under some collective behavioral cloud.
I admit I used to believe that as well. Ralph's Paper
on the possible miss measurement of M&A gains forced me to re examine my
position. Once the anticipation effects before the bid announcement are included,
M&A starts to look better. Illustrating again that business men are
sometimes smarter than academics believe, Ralph excluded.
The other aspect is over caution regarding a possible over
priced deal has competitive consequences. Banking is undergoing a metamorphous.
Banks refusing to participate will suffer. There will be no second place
prizes.
j
