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by John Brooks

Exploring the multimillion-dollar merger wars, the award-winning author analyzes the operations of the high-stakes merger game fueled by investment bankers on Wall Street

Genres: History

Tankobon Hardcover

First published September 28, 1987

About the author

John Brooks (1920–1993) was an award-winning writer best known for his contributions to the New Yorker as a financial journalist. He was also the author of ten nonfiction books on business and finance, a number of which were critically acclaimed works examining Wall Street and the corporate world. His books Once inGolconda, The Go-Go Years, and Business Adventures have endured as classics. Although he is remembered primarily for his writings on financial topics, Brooks published three novels and wrote book reviews for Harper’s Magazine and the New York Times Book Review.

Reviews

[David Watson · Rating 4 out of 5]

“The more things change, the more they stay the same; history doesn’t repeat, but it rhymes.” Sayings such as these rang true and loud as I read The Takeover Game, which charts the merger-and-acquisition craze of the 1980s and its side-effects such as the infamous insider trading scandal involving Ivan Boesky and others. John Brooks charts the transformation of investment banking in the 20th century from an exclusive, gentlemanly realm in which the underwriting of new securities issues was the main business, to the multi-disciplinary big names – Merrill Lynch, Morgan Stanley etc – of the 80s, in which securities trading, arbitrage and other activities that would have seemed vulgarly out of place in the earlier decades of investment banking were now the norm. The plunging profitability of underwriting was a key driver of this. The rapid rise in popularity of hostile takeover bids – funded by the biggest financial innovation of the 80s, the junk bond – is charted and its ill-effects made clear. It forced executives at target companies to focus on foiling hostile bids, or getting better terms from the would-be acquirer, to the detriment of actually managing their companies and engaging in long-term thinking and planning. The main beneficiaries were not shareholders of either the acquired or acquirer company; overall returns weren’t that high. No, the main gainers were the investment banks who reaped huge fees when a merger or acquisition, especially a hostile one, happened. And the investment banks pitched furiously for this business, making many unsolicited offers of their services. Efforts to regulate didn’t come to much, with the Reagan administration seemingly ideologically opposed. Brooks concludes with some regulatory recommendations. In the decades since he wrote The Takeover Game, hostile takeovers have become far less common but many new negative developments have emerged to take their place, namely the massive collapse in mortgage-based securities of the late 2000s. One point Brooks makes in The Takeover Game – that in the 80s, Goldman Sachs had a reputation for probity that the other big-name investment banks didn’t quite – is no longer true, with Goldman being one of the biggest players in the mortgage-backed securities fiasco. And moving to the present day, one wonders what Brooks would have made of the current sky-high stock valuations driven by record-low interest rates. Yes, it’s a very different world today, but still the same in many ways. And a couple of key players in the 80s financial scene who weren’t investment bankers but who used investment bankers’ services in the course of their business, whom Brooks mentions in The Takeover Game – Carl Icahn and Warren Buffet – are still very much in the investment game today, aged 80-plus.

[Dominik · Rating 3 out of 5]

A much better book than his "Once in Golconda", similar to "The go-go years". The book language is engaging; however, the subject is dry. Again Brooks focuses on the regulation side of the market, providing in the last chapter his remedy to limit the excesses of the 1980's merger mania.
The book is good because Brooks wrote it in 1987, before the conclusion of 80's excesses. This left him not knowing what had happened later and exposed his thought process iterating on 1920's and 1960's, without the hindsight bias. This is why I prefer to read books written just after the fact instead of those written years later. As "freshly written" books are more genuine in a sense, that they provide a raw account of the event, exposing how the recent atmosphere affected people, their thinking processes and ultimately judgement.

[Baby Tiger · Rating 5 out of 5]

heartwarming sketches