M&A

Throughout all of the ups and downs of the last few months there continues to be a significant amount of merger and acquisition activity. I agree with the line of thought that says increased M&A is a sign of confidence in the economy and/or the environment for doing business.

There is a very long list of reasons why 2006 should be a rough year for stocks but the M&A contradicts the rough year idea. Oracle is not buying Siebel because of what might happen in the next two months. A purchase like this get done with an eye to the long term. Maybe longer term than Larry Ellison thinks or maybe not, that is a variable. Same thing with eBay buying Skype.

I have written a few times about my doubts for equities in 2006. I may be wrong. It is unlikely that Ellison thinks the Siebel deal could get cheaper six months from now otherwise he would wait. The deal is getting done now because either the price is right (in his opinion) or he thinks someone else would come in if he doesn't.

This is important to me as a reason why I might turn out to be wrong about next year. I haven't changed my opinion but this challenges my opinion. As a matter process I try to seek out and understand ideas that challenge my opinions.