Who interviews and hires the CEO
Of takeovers and changes in CEO
Martina Müller-Kamp, member of the management team at Graubündner Kantonalbank, swaps roles and interviewed capital market expert Jens Korte about trends this year and forecasts for next year.
Martina Müller-Kamp: In the last few weeks there have been a number of spectacular takeovers, such as the announced deal between the online ticket exchanges viagogo and StubHub or between the luxury goods manufacturers LVMH and Tiffany & Co. Are these numerous takeovers a sign of a robust economic situation or are they? these more company-specific reasons?
Jens Korte: Both are true. We're seeing a boom in the luxury market, which is why LVMH, for example, can raise the money it needs to take over companies like Tiffany & Co. for $ 16 billion. Tiffany & Co. as a seller, on the other hand, is experiencing a small phase of weakness. When Charles Schwab took over TD Ameritrade for 26 billion dollars, the brokerage business in the financial market is in a state of tremendous upheaval because the commissions for securities business have been eliminated. That is why the businesses are being merged. In the ticket exchange industry, however, there is more and more criticism of its services and there is more and more competition. So here, too, a certain weakness is the reason for the merger.
What are the prognoses for the next year? Are there sectors in which takeovers can be expected more often?
2020 is election year in the United States. This brings with it a certain political uncertainty and could limit activity in terms of mergers and acquisitions somewhat. On the other hand, the massive tax cuts by US President Donald Trump have resulted in companies having more money and then partly investing this in takeovers. Much also depends on how the trade dispute between the US and China develops. In terms of the industry, it is believed that there could be some acquisitions in the healthcare and high-tech sectors, for example. But overall, on Wall Street, there is more of the opinion that merger and acquisition activity will ease somewhat.
There's another trend this year: an unusually high number of CEOs have resigned in the past few weeks. Does that have to worry us?
In October alone, over 170 CEOs, i.e. board chairmen, vacated or had to vacate their posts. There were some spectacular cases among them, such as Steve Easterbrook, the boss of McDonalds, who actually did a good job but stumbled upon a love affair in his own company. Or Adam Neumann from WeWork. The company had to cancel the IPO. Another example is the boss of the e-cigarette manufacturer Juul, who had to abdicate. These layoffs or changes in leadership are astonishing. Actually, there is a change in management when business is not going well. But when I look at the overall economy, it actually looks pretty good. So these changes could be a small warning shot. So far, Wall Street has not been alarmed.
The conclusion of the Graubündner Kantonalbank: The robust economic situation will probably bring a much calmer end of the year than last year. In the next year, the GKB sees a political stock market year with again more volatility.
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