Come Together

April 26, 2002
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Has anyone seen DavidWagner recently?

The former Old Kent Bank chief has kept an earthworm's profile locally since the merger with Fifth Third. DavidFrey has been slightly more visible, but mostly in the nonprofit and social arenas, since the Bank One swallow-up of NBD.

How about Autocam's JohnKennedy after Aurora Capital Group's intervention or FMB's DavidOndersma after the coupling with Huntington Bank?

While still around, the sudden changes in their respective businesses have left them occupying different stations within West Michigan's business community.

Mergers and acquisitions mean more to a community than just a combination of two businesses. Often, a community's entire culture is changed in an instant.

That's not to say all mergers and acquisitions are bad. But all mergers and acquisitions involve change. Sometimes the change is significant. Other times it's subtle.

And every change affects a community in one way or another.

Despite some ripples locally, led by such banks as Old Kent and Fifth Third, Bank West and Chemical Bank and Macatawa Bank and Grand Bank, the merger waters nationally were far calmer than in years past.

According to Mergerstat LP, a firm that tracks mergers and acquisitions in the United States, M&A activity fell 16.4 percent off 2000's pace to 8,224 transactions, the largest percentage year-over-year drop in volume since 1987. Total disclosed deal value fell to $702.8 billion from $1.33 trillion in 2000.

The total number of deals worth $1 billion or more dropped to 118, or 76 percent, in 2001. Disclosed values on those deals declined to $472.6 billion from $1.05 trillion in 2000. Contributing to the decline in mega-deal value were some high-profile cancellations in 2001: UAL's $4 billion deal for US Airways Group; Dynegy's $7.3 billion agreement to buy Enron; GE's $44.2 billion agreement to acquire Honeywell; and potentially Hewlett-Packard's $25.7 billion agreement to purchase Compaq Computer.

On the other hand, there were big deals to be had in 2001. Mergerstat's top five transactions of the year were: Comcast's $44 billion deal to buy AT&T Broadband & Internet Services; EchoStar Communications' $29.7 billion deal to acquire Hughes Electronics from GM; American International Group's $23 billion plan to combine with American General; Phillips Petroleum's $15.2 billion agreement to acquire Conoco; and First Union's $13.4 billion deal to buy Wachovia

There were also U.S. industries that stayed strong in 2001, though not many. Only 18 of the 49 industries tracked by Mergerstat showed an increase in year-over-year deal activity. The top five performers were the insurance industry, which posted 64 more transactions than 2000, followed by the health services (+42 transactions), real estate (+40), oil and gas (+28), and energy services (+19) industries.

The computer software, supplies and services industry led the industries with the largest declines in year-over-year deal activity, recording 833 fewer transactions than 2000. Second on the list was the communications industry with 140 fewer transactions than last year, followed by the Construction contractors and engineering services (-93), electronics (-79), and electrical equipment (-75) industries.

The tight-fisted nature of the market today has a lot of dealmakers looking to the spring of this year, hoping that a predicted recovery in the U.S. economy will jump-start lender confidence and get the deal flow pumping again. Even if that happens, a return to the heady days of 2000 appears improbable.

Cross-border transactions also slowed in 2001, especially among European buyers of U.S. companies.

Even in the rough market of 2001, some companies still managed to go on buying binges, however. The top 5 buyers of the year were: General Electric (49 deal announcements), Brown & Brown (26), Tyco International (19), Gallagher & Co (17), Black Box (15), CRH (15), and divine (15).

There were 4,833 deals for private companies and 727 deals

for public companies in 2001. Cash was the most popular method of payment for transactions in 2001, accounting for about 45.7 percent of 3,071 transactions where deal value was disclosed. Stock payments accounted for about 27.9 percent and a combination of stock and cash payments accounted for 24.9 percent. (Debt and warrants and options accounted for the remaining small percentage.) More information on 2001's M&A activity can be found at Mergerstat's Web site,

www.mergerstat.com

  • The new year also kicks off a new century for a local organization.

The National Association of Credit Management-Western Michigan Inc. is celebrating its 100th birthday

NACM-Western Michigan is a not-for-profit company that was formed in 1901 to assist the credit and financial professional in his or her pursuit of extending credit in the business world, said President Gary Marshall

"Today, one of the greatest challenges of the financial department of most companies is collecting their accounts receivable," he said. "We provide our members with the tools, such as education, collections, credit reporting and consulting, to help them achieve the goals of their employer."

No wonder NACM is entering its second century. That's an area in which just about every company needs assistance.

  • The Van Andel Institute collects scientific advisers like rare gemstones, but the latest addition to the board brings a special wrinkle in his resume.

Richard D. Klausner, M.D., is the former National Cancer Institute (NCI) director and an internationally recognized expert in molecular and cell biology. That by itself makes him a rare find. But his latest appointment probably will be what lay people remember most about him.

Klausner recently was named senior fellow and special adviser to the presidents for counter terrorism at the National Academy of Sciences (NAS). This week, he began serving as a liaison between NAS and the government's antiterrorism efforts while maintaining a lab at NCI.

Remember the name next time bioterrorism makes the news, which should be just about all the time.

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