In the 1950s and 60s, American capital markets produced conglomerates. These conglomerates offered an unsophisticated investing public pre-packaged diversification. They were also able to leverage their mass to reliably tap the capital markets. Through the 1970s and 80s, the American finance matured. Investors found portfolios better vehicles of diversification than conglomerates. New capital markets negated size as a pre-requisite to financing. The inefficiencies of having unrelated businesses under one roof became a greater liability than any prior advantages. The LBO tigers dismantled the titans.
A similar story seems to be playing out in tech. The dot com bubble scarred a generation of management. These firms hoard cash, disdain debt and covet the reliability size brings. This is not irrational–the technology capital markets are notoriously capricious. LBOs don't work on an equity-rich capital structure where management holds all the voting rights. Perhaps this will bring an alternative to the acid pens of activist investors.
A similar story seems to be playing out in tech. The dot com bubble scarred a generation of management. These firms hoard cash, disdain debt and covet the reliability size brings. This is not irrational–the technology capital markets are notoriously capricious. LBOs don't work on an equity-rich capital structure where management holds all the voting rights. Perhaps this will bring an alternative to the acid pens of activist investors.