The negative signaling of M&A

→ Lina Khan Fires a Crooked CEO

…mergers, especially for firms that engage in a number of them, are often a way of focusing on arranging the rules of a market while the operational capacity of a firm declines.

It’s nicely counter intuitive to think that a successful merger could be signal that a company is losing its operational effectiveness. I think it’s much more common to admire the acquisitive prowess of companies like Alphabet, Disney or Meta. And yet, the idea that a company that focusses on market organisation over innovation is in decline is compeelling. It also aligns with this recent tweet from Flo Crivelo.