M&A: Carpe diem, says Towers Perrin

Quite how much the world changed after Lehman Brothers fell is still up for debate. Perhaps not as much as indicated by a new piece of research by Towers Perrin. This starts with a drawn-out parallel between the demise of Dick Fuld’s bank and the work of sixth-century monk Dionysius Exiguus, whose invention of the BC/AD system, Towers says, came to “define civilization”.

Still, once the long-dead monks are out of the way, the Towers Perrin / Cass research shows that for the select band of firms brave – and strong – enough to undertake M&A post-Lehman, the reward has been stock market out-performance. And it was even better for an elite band able to make more than one acquisition. As I wrote:

“Stock markets rewarded companies such as Johnson & Johnson (JNJ.N) and Cisco (CSCO.O) who were brave enough to make acquisitions in the months after Lehman Brothers’ collapse, a study released on Monday showed.

“Although firms who made purchases worth $100 million or more suffered an average 25.5 percent fall in their stock price, they outperformed the wider market by 6.3 percentage points, the Towers Perrin/Cass Business School research found.”

Read the full story here. Incidentally Towers and rival consultants Watson Wyatt have taken their own advice and are working on an all-stock merger. Wonder who they will tap for merger consulting?

What’ll be Watson Wyatt’s ’09 bonuses?

Top Watson Wyatt executives got generous bonuses for fiscal year 2008, with CEO John Haley getting $1.3 million, which was 148.6 percent of the target bonus. 

Haley also recommended annual bonuses ranging from 112.3 percent to 154.2 percent of the target bonus for the other named executives, according to an SEC filing.

Haley’s bonus depended on 11 principal factors, including how well the company met its financial goals for the year. 

Investors worry about Towers Watson

Watson Wyatt and Towers Perrin executives are excited about their deal to create Towers Watson, but investors are not cheering as much. 

Watson Wyatt’s shares plunged nearly 10 percent in Monday morning trading, as investors woke up to the all-stock deal valued at about $3.5 billion, announced Sunday.

A Citi analyst downgraded the Watson Wyatt, which is publicly held, to “hold” from “buy”, calling the companies’ three-year integration plan a “major risk.”