Excerpt of the Day: On the Latest Wave of M&A (Mergers and Acquisitions) Activity
From a subscription-only editorial in Tuesday’s Wall Street Journal:
A closer look at who’s buying and selling also reveals some notable trends in the capital markets. For example, yesterday’s deals included the biggest private-equity buyout in history, with the Blackstone Group announcing its agreement to take private Equity Office Partners, a commercial-real-estate trust, for $36 billion, including assumed debt. This adds yet another exclamation point to the rising tide of companies going — or being taken — private.
We’ve argued that the Occam’s razor explanation for this trend is that overregulation and lawsuits have tipped the balance in favor of private management for many investors. Managers who want to spend more time taking risks, and less time talking to lawyers, are increasingly turning to private equity to reduce their hassles and improve their returns. Money will flow to where the returns are, and these days more and more investors seem to think that more money can be made outside the hyper-regulated public equity markets.
As a political matter, this should worry anyone who believes that the development of a broad investor class is good for the preservation of capitalism.
It absolutely should. People who have a visible stake in the system are less likely to support misguided legislation and regulation that would compromise it.
