When Ruthless Dealmakers, Shrewd Ideologues, and Brawling Lawyers Toppled the Corporate Establishment

Public Affairs, 2016 more...

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  • Background


Business journalist Robert Teitelman offers an in-depth, eminently readable account of the takeover tsunami that engulfed Wall Street and corporate America in the 1980s. With dry wit and an eye for vivid detail, Teitelman tours the decade’s smoking battlefield of mergers, leveraged buyouts and hostile takeovers. He reports on the University of Chicago’s free market economists, who provided a rationale for unrestrained takeovers and influenced the regulatory stance of President Ronald Reagan’s administration. Teitelman also explains how deal mania realigned corporate governance away from the “stakeholder model” – in which managers ran companies for the benefit of employees, customers, shareholders and the community – to the “shareholder model” – in which only stock owners’ profits mattered. getAbstract recommends this enlightening history to students of business and of business reporting, as well as to aspiring M&A specialists.


Stakeholders vs. Shareholders

In the 1980s, the rising tide of mergers and acquisitions (M&A) in the United States exploded into a torrent of takeovers and buyouts. While companies were feverishly changing hands, the corporation itself – and Americans’ ideas about it – transformed into something new.

In the prosperous years after World War II, the corporation presented itself as a “fortress,” a patriarchal, insulated and stable institution that served a wide range of stakeholders: investors, employees, customers and communities. Beginning with the first surge of hostile takeovers in the second half of the 1970s, the conceptual nature of the corporation changed from solidity to flux, uncertainty, insecurity and complexity. Only one type of stakeholder counted: the shareholders.

To shareholders – who, in the 1980s, increasingly consisted of institutional, rather than individual, investors – the only performance metric that mattered was stock price. Free market theorists argued that a high share price indicated “managerial efficiency” and that shareholders should “discipline” managers who failed to sustain high stock prices. The threat of a ...

About the Author

Robert Teitelman, founding editor in chief of The Deal and former editor of Institutional Investor, is a freelance editor and writer for Institutional Investor, Barron’s and private clients.

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