Despite gathering storm clouds over Wall Street, global mergers-and-acquisitions activity reached record proportions last year. A string of landscape-shifting deals have been spilling over into the first months of 2008. The worth of worldwide megamergers and acquisitions in industries ranging from automobiles to video games was up 23% last year to $4.8 trillion, according to market researcher Dealogic. Even with a slowing economy, American M&A deals were up 3%, to nearly $1.6 billion, in 2007.
Acquisitions are often efforts to "buy" innovation, folding in a so-called disruptive, or game-changing, technology developed by another firm. Or they represent attempts to bring in a staff known for its consistent and profitable creative output. Indeed, earlier this week, analysts widely interpreted video game giant Electronic Arts' (ERTS) gambit to acquire Take-Two Interactive Software (BusinessWeek.com, 2/25/08) as an attempt to gain control of Take-Two's (TTWO) blockbuster Grand Theft Auto franchise. And Microsoft's (MSFT) recent $44 billion megabid (BusinessWeek.com, 2/1/08) for Yahoo! (YHOO) is a last-ditch hedge against Google (GOOG), which has managed to innovate circles around the two tech titans.