Monday, December 04, 2006

Incentives and the timing of takeovers

I reader brought this cookl article to my attention:

From the NY Times:
"...8 of the 20 largest deals in the last four years have taken place in November and December, according to Thomson Financial.

How to account for this? ....The urge to merge may be influenced by bonuses for all involved in the deal, especially the bankers. Corporate America’s biggest cheerleaders and boosters need to get paid.:

"In the byzantine office politics that decides how to dole Wall Street bonuses — expected to be a cash pile of more than $100 billion across the Street this year — a banker can receive a little extra bonus money for a deal announced this year, and get paid a little extra again next year when the deal closes."


I'd also add if you think you may be switching companies next year, you may push for deal now in order to get the bonus.

Thanks JH

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