CORPORATE MAKEOVER: The Reshaping of the American Economy by Harvey H. Segal
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CORPORATE MAKEOVER: The Reshaping of the American Economy

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A genuinely illuminating, refreshingly unsentimental, and gracefully conveyed analysis of the restructuring binge that has convulsed corporate America throughout the 1980's. In Segal's book, ""makeover"" is a protean term encompassing hostile takeovers, tender offers, leveraged buyouts, proxy contests, divestitures, recapitalizations, and other means to the end of enhancing returns on the assets controlled by publicly held companies. By his persuasively documented account, the process, while undeniably painful, is essentially salutary for US business--and its many constituencies. In reaching this conclusion, the author (a Ph.D. economist whose credentials include a 15-year stint as a Citibank V.P.) notes that recent events represent an overdue shift in the balance of power between professional managers and their putative masters, i.e., stockholders. Having achieved an unprecedented degree of autonomy, the former frequently exercised their great authority in ways that failed to serve the best interests of the latter. Cases in point range from empire-building acquisitions that do not improve profits through defensive or incumbent. entrenchment measures (like so-called poison pills) and rubber-stamp boards. In anecdotal fashion, Segal recounts how, within the past decade, raiders (with some help from a switch in ownership from individuals to less acquiescent institutions) began pouncing on enterprises whose executives were not making the most of them. He has no real quarrel with the tactics employed by these opportunists. To illustrate, the author argues convincingly that the advantages of substituting debt for equity can be considerable (if only in terms of discipline). Along similar lines, he points out that concerns that are competitive in global as well as domestic markets afford the greatest job security. Nor is Segal sanguine on the prospects of conglomerate colossi such as General Electric. Indeed, over the next 20 years or so, he looks for an accelerating trend to more modestly sized companies run by owner-managers with real stakes in their success. Unconventional wisdom that puts paid to a wealth of socioeconomic delusions.

Pub Date: Sept. 1st, 1989
Publisher: Viking