The M&A spree of the 1990s and after has been compared to what happened in the 1980s. But the comparison is misleading, according to a number of experts. In the 1980s, the corporate raiders who were pushing the takeovers and leveraged buy outs (LBOs) were entrepreneurs putting their own money on the line.

They had an incentive to get results. And they did. They created value for shareholders and cut out fat from management. But today’s mergers are different. They’re driven by CEOs who aren’t using their own money and who think the sum of the merger will somehow turn out to be greater than the parts, through synergy.

That simply isn’t so, most of the time.

The mergers today actually look a lot like the mergers in the 1960s, which created dinosaur companies. Like all dinosaurs they were too bulky to survive. The deals were often questionable, if not downright shady. There were lucrative packages for the CEOs involved, and layoffs and loss of value for the employees and shareholders. You’re seeing all that again. Today, what these mergers do create, though, is huge fees for the investment banks.

This is typical of the financialising of an economy, which is what we have now in many parts of the world. That’s when instead of upping productivity and creating real value, you shuffle papers and fiddle with numbers to create the illusion of value.

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