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Barbarians drive through the gate

Posted by Arun Uday on May 17, 2007

The major headline this week in the PE world was the acquisition of Chrysler by PE firm Cereberus for $7.4 billion. It was not so much the size of the deal thats got people talking. While $7 billion may seem large,  my guess is that it wouldn’t even count amongst the top 10 largest deals of 2007. Rather, it’s the “fall” of an institution such as Chrysler, an emblem of American industrial prowess to “corportate raiders armed with money bags” thats really dented Uncle Sam’s psyche. Two points to ponder upon here. One is of course, the incredible power that PE firms wield today. But, more on that in a later post.
What I’d like to discuss here is the inexorable law of business lifecycle that all companies are subjected to. There was a time when it was said “Whats good for General Motors is good for America.” For decades, it was first on Fortune 500 list and was the symbol of American corporate might.  Today, it’s annual report reads like the script for a Greek tragedy – workers up in arms with management, huge financial liabilities and a share price thats on a free fall.  Chrysler, along with Ford and GM completed the triumverate of the Big Three of the automobile industry in the US. Now, the score card reads – One down two to go. It is interesting to compare the top 10 list in terms of market capilalization across time. Read the rest of this entry »

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