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Economic Climate: 'Tis the Season for Acquisitions, Mergers and Spinoffs

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We saw a lot of companies mixing it up last year—from companies merging to companies spinning off new companies. Comcast and Timer Warner Cable; Facebook and WhatsApp; and General Electric and Alstom are just a few of the big, recognizable names that took the plunge.


The plateauing world of technological innovations is just one of the many factors creating a perfect storm of mergers, spinoffs and acquisitions in the past year, and the trend is likely to continue well into 2015.


With the market for telecommunications ever saturating, there's less hype for new ideas as we reach the fifth and sixth reiterations of the big brands' biggest sellers (iPhone and Galaxy). While the world waits anxiously for the next big thing in the tech world, the companies in the shadow of the big few are desperately looking for growth security. This makes them easy targets for private investors seeking a cheap company to purchase.


Another sector showing its age is the universe of Internet 1.0 companies, such as MySpace, which has struggled and largely failed to maintain its relevance, despite its former glory of being one of the top sites in the world. Some companies to watch this year, however, include Yahoo! and AOL, which are high up on the list of old Internet startups that are foundering in the waves created by Google and Facebook. Being too large to be targets themselves, the two companies are rumored to be in the talks for a merger.


Also on the list are longtime “partners” eBay and PayPal, whose existence has been mutually beneficial and arguably dependent upon one another up until the last few years. News of a separation of the two entities into two individual, publicly traded companies sent eBay's stock skyrocketing. The spinoff will likely be complete by summer.


The largely flat economy over the past seven years is taking its toll on longtime American mainstays, and while many companies, such as RadioShack, have called it quits, some are still hanging on, but just barely. Darden Restaurants' two big players, Red Lobster and Olive Garden, are feeling the pressure of weak growth and changing tastes. Though a makeover for Olive Garden is being pushed by shareholders, there's more than a possibility that the two chains will split sometime this year.


In a world not too long ago, it was standard to go to your local computer store to pick up some new hardware, but no more. Two factors have all but sealed the fate of all-in-one computer manufacturers: Ordering parts on the Internet is easier and cheaper than ever (and many sites will put your new computer together for you), and more people see the cost-saving benefits of installing their hardware themselves.

Hewlett-Packard, once the biggest name in all-in-one PCs with their mammoth Compaq brand, has been crippled by a failure to stay relevant. The 75-year-old company has dumped its consumer sector almost entirely and is trying to focus on corporate services, but if RIM's once-powerful Blackberry phone is any indication, that won't help HP for long. Rumors of a company split have caused plenty of concern for HP's future.

Mergers & Acquisitions
Credit: Fotolia


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