Tuesday, July 25, 2006

Deja vu all over again?

Sometimes the more things change, the more they stay the same. NY Times Deal Book has a really interesting article on the similarities between the takeover market now and in 1988.

A quick look-in and then the link to the actual DealBook article.
"HCA’s $33 billion buyout announcement on Monday is turning up all kinds of references to the late 1980’s, which was the last time Wall Street saw a leveraged takeover on such a scale."
"The fallout was a buzzy excitement among investors and arbitrageurs, many of whom imagined that the next megabuyout could strike anywhere, at any time. There was also much hand-wringing among lawmakers, many of whom thought the debt-fueled RJR Nabisco transaction and others like it might harm the economy. Though similar sentiments can be heard today, it is also interesting to note how some of the heady predictions of the late 1980’s failed to come true."
For instance:
"There was also the promise by some politicians to pass laws to make L.B.O.’s more difficult. The situation had gotten “out of hand,” Senator Lloyd Bentson, chairman of the Senate Finance Committee, was quoted as saying in a New York Times article dated Dec. 5, 1988. In the same article, Representative Dan Rostenkowski, an Illinois Democrat, vowed that Congress would “do something about it.” Even Federal Reserve Chairman Alan Greenspan, just a few months into his tenure, warned banks against profligate lending to finance buyouts.

But those legislative rumblings, which included a proposal to end the deductibility of interest, largely fizzled."

Read the entire thing (including an NY Times article from 1988) here.

Yogi Berra would be so proud, it really is Deja Vu all over again!

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