Often I find myself dreaming of the day I become the chief explorer with National Geographic, capturing photographic images of nature deep in the Okavango Delta. When that day comes, I'll watch in awe the interaction of exotic animals, and observe their predatory behavior. What a thrill it will be to witness the natural hierarchy, precarious seasons and survival techniques of prey trying to outwit some of nature's best hunters.
But I need not travel to Africa just yet to witness this raw survival behavior because merger and acquisition season is soon upon us. You can feel it in the air. Wealth will be created. Opportunities will be seized. Capital will be deployed in fast frenzied attacks. Strategic alliances will be created in the dark shadows. Blood-thirsty predators will rip at each other's prey. We will see the plump prey running, hiding to save themselves and even consume poison in some cases to make themselves less appetizing.
It is nature at its best. It is the Kalahari of Capitalism where survival is reduced to the instinctual.
How did we manage to get here? The economic storm of last season has left us wet, tired, and disoriented. But we survived. Some of us fared better than others. Some, made it by the grace of government sanctuary and really should not be here, but they are. So now what?
During the storm, doors were shut to our corporate food supply. Access to credit and capital was cut. Yet through this torrential storm we observed tremendous strengthening. Some used the dark days to get lean and fit. They shed their fat and with great savvy stored capital knowing the storm would one day pass. Today, they are extremely driven, purposeful and motivated. They are strong and they are looking to get stronger.
There are clear signs that the storm is starting to clear. The clouds are parting and things are looking brighter. Capital is everywhere, and for those with access to it, it is incredibly cheap. We could have never imagined that capital would ever be so economical. And it is sitting there idle, but for how much longer?
This new brightness will shed light on what opportunities lay before us. The lean and driven will start hunting. Already we are seeing predators stirring in the long grass, eyeing the plump buffalo striding unwittingly, weighed down by its fatty capital reserves. Does that buffalo recognize the risk he actually faces?
U.S. and global corporations have amassed a mammoth war chest of capital. The question now remains, are they planning to use it? Companies must soon decide whether to be a cheetah or a buffalo.
Being rich and fat now is extremely risky. Large underutilized capital reserves make you vulnerable and viewed as a juicy morsel to a predatory company. So as the old adage says, use it or lose it. Otherwise, a wily predator could seize the opportunity to use your own capital to acquire your company. How painful would that be?
So I ask the governors of our companies: return the capital to its rightful owners, us, the share holders. Or better yet, deploy it and buy some wealth generating assets. The hoarding has to stop. The health and survival of our economy depends on it.
JOANNA MAKOMASKI, the former risk manager for an energy delivery company, is a specialist in innovative enterprise risk management methods and implementation techniques with V3 Advisory Group.
October 15, 2010
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