Olympus agrees to acquisitions probe
The more I learn about business, the more one thing becomes clear: ability is a small part of running a business. There are many ways to excellence and profits in business, and ability is definitely one of them. Business however, I have learned, is more complicated than that. As the Olympus saga illustrates, many times businesses are able to survive misspending millions. As long as the business model remains intact and there is somebody who thinks that the business can generate cash at an acceptable rate of return, the business will survive. I also see compliance and not ethics as the defining force for the code of conduct, which I attribute to the fact that self-interest is the defining force of capitalism. Unsurprisingly, unbridled self-interest can be fairly self-destructive as well. Regulations keep that in check to some extent, but there are always people looking for a loophole. So goes the game of cat and mouse.
In terms of M&A, it brings out some critical questions like value of an acquisition to the buyer and the fees paid to advisors. Already enough research papers have indicated that, at least in the short-run, the value of the acquisition goes to the seller. Deals like the infamous sale of ABN Amro raise a pertinent question on the effectiveness of advisors. The last thing the M&A world needs is the use of advisory as a cover for siphoning away millions from a company. All in all, an ignominious event in the corporate world that should be dealt with firmly.
The more I learn about business, the more one thing becomes clear: ability is a small part of running a business. There are many ways to excellence and profits in business, and ability is definitely one of them. Business however, I have learned, is more complicated than that. As the Olympus saga illustrates, many times businesses are able to survive misspending millions. As long as the business model remains intact and there is somebody who thinks that the business can generate cash at an acceptable rate of return, the business will survive. I also see compliance and not ethics as the defining force for the code of conduct, which I attribute to the fact that self-interest is the defining force of capitalism. Unsurprisingly, unbridled self-interest can be fairly self-destructive as well. Regulations keep that in check to some extent, but there are always people looking for a loophole. So goes the game of cat and mouse.
In terms of M&A, it brings out some critical questions like value of an acquisition to the buyer and the fees paid to advisors. Already enough research papers have indicated that, at least in the short-run, the value of the acquisition goes to the seller. Deals like the infamous sale of ABN Amro raise a pertinent question on the effectiveness of advisors. The last thing the M&A world needs is the use of advisory as a cover for siphoning away millions from a company. All in all, an ignominious event in the corporate world that should be dealt with firmly.
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