If the number of hostile takeovers continues its predicted rise this year, don't expect a repeat of the 1980s when private equity firms played a central role. One example from that era is the $25 billion takeover of RJR Nabisco Inc. that gave rise to the finance geek classic book and movie “Barbarians at the Gate.”
There have been a total of 30 completed or pending hostile takeovers amounting to a total deal value of $272.5 billion year-to-date Aug. 18, according to Dealogic. This is the highest combined deal value since 2000 and is up from 18 hostile takeovers with a combined $24.9 billion in deal value for the same period last year.
Private equity firms have evolved, one investment banker claims. As private equity matured general partners realized they needed to be nice to company executives as sources of deal flow.
Private equity firms today “are generally quite reluctant to employ hostile techniques as they don't want to antagonize the very same constituency (CEOs) that they partner with on deals,” said Jeffrey Golman, Chicago-based vice chairman and head of investment banking for Mesirow Financial.
“If a firm is perceived as employing hostile takeover tactics, they are likely to find it quite difficult to form partnerships with management teams to buy companies as those management teams are more likely to partner with a PE firm that has a reputation for collegiality and partnership.”