If you read any M&A news in Q1 of ‘23, it either felt like sucking nails through a straw or wallowing in the comfort that at least you don’t have to deal in multi-billion dollar megadeal mergers (whew).
Across all categories – from deals less than $100 million to those of more than $10 billion – completed mergers and acquisitions were at their lowest since everyone was locked inside playing Animal Crossing in Q2 2020.
All signs point to a brighter Q2 this year, but before you put the shades on, take a moment to point, laugh and learn from the Quarter of Cringe. Seriously, someone should gift these people a CapLinked sub.
Where do we start with this one, pure M&A news fuel, the megamerger that’s been the snake eating its own tail for nearly a decade? Already a hyphenate when it merged with DirecTV in 2015, AT&T-Time Warner showed the world it only costs $200 billion to lose 9 million subscribers, fire 50K employees, and straight-up jettison a buffet of beloved brands. Truly, a business deal without the business or the deal.
When Warner Bros. Discovery slithered out from that dumpster fire in ‘22, it immediately created a brand so confusing that its own employees didn’t know who they worked for. If they had a brand at all, it was We Don’t Pay Residuals, Inc.™️ Fast forward to ‘23, and of course that shambling chimera would suck HBO into its maw, because we just can’t have nice things.
After removing nearly 40 legacy titles from HBO Max, jacking up prices, and canceling a slate of already completed projects for tax breaks (gotta make room for F-Boy Island), Warner Bros. Discovery just announced plans to rebrand the once-beloved app to just “Max,” killing a revered 50-year-old brand in less than one fiscal quarter.
HBO? More like RIP, amirite?
Microsoft Enters a Blizzard (of Regulation)
Microsoft instantly drew the ire of the U.S. Senate when it announced plans to acquire World of Warcraft and Call of Duty publishers Activision-Blizzard in early ‘22. Better-selling competitors at PlayStation have relished the role of wounded underdog ever since, racking up more and more juicy commitments from Microsoft’s Xbox brand with each howl of “it’s just not fair!”
By the end of Q1 ‘23, the M&A news was not good. MS is looking at a lawsuit from the FTC, an investigation by the UK’s Competition and Markets Authority, an antitrust warning from the EU, and a 10-year commitment to publish Call of Duty on competing platforms if the deal goes through.
Should these monolithic mergers be subject to this level of antitrust scrutiny? Sure. That AT&T-Warner one should’ve been back when Fetty Wap was on the charts in ‘15. Is Microsoft’s plan any worse than that? Not really. But with renewed public interest in trust-breaking, they picked just the right time to become a very public punching bag for all those regulatory bodies just waking up from a 10-year nap.
Here’s something accessible-to-anyone-from-anywhere VDR communication can help you with: reading the room.
Kroger And Albertsons Could Eat Everyone’s Lunch
Speaking of recent M&A deals failing to read the room, maaaaabye the quarter when everyone’s paying $7 per egg isn’t the best time to celebrate a $24.6-billion merger that’ll put over 5,000 supermarkets under a single brand roof. TBH, we could go for a little more competition in a landscape where you gotta mortgage baby formula.
Oh, and then there’s the “divestiture plan” (business deal speak for “bye”) to sell off about 300 stores. A move that means fewer grocery stores in underserved communities (yay food deserts), thousands of employees anxious about layoffs and losing pension plans, outcry from unions, and more power for consolidated uber-grocers to pay whatever prices they want to the 2 million farm workers already stressed to the max.
But don’t worry, Kroger execs pinky promised the FTC they’ll be super nice to everyone, so it’s probably chill.
Darkness Before the Dawn
OK, breathe out toxicity, breathe in hope. If recent M&A deals are anything to go by, we had a rough one, powered by everything from inflation to VCs betting on rainbow valuations. But the quarter wrapped with a bang:
- Microsoft finally netted a win with a big stake in the London Stock Exchange Group.
- Thoma Bravo made an $8 billion bid for Coupa Software.
- Amgen put nearly $30 bil on the table for Horizon Therapeutics.
And top-tier VCs are gearing up for a big year with enough confidence for a slew of them to go public. And so far, no one’s laughing.
Chances are, we’ll be looking at a less goofy Q2 – and we’d probably be reflecting on Q1 with a lot less secondhand embarrassment if a few of these corps had a better workflow for streamlined, cross-device collab.
Because sometimes, a healthy dose of collaboration is the key to self-awareness. And we can help with at least one of those things.
Dan is a freelance writer with over a decade of experience, currently residing in Dallas, TX. Along the way, he’s been lucky enough to collaborate with brands including Fortune, The Motley Fool, Office Depot, MSN Money, and many more.
Bloomberg Law – ANALYSIS: There Was No Sign of an M&A Market Rebound in Q1 2023