God knows I make mistakes (and some of them are whoppers) but the combination of errors causing the write down of $580,000,000 / or 75% of an acquisition target’s (ERA Mining) value within a year of the Caterpillar transaction, is thankfully not yet one of them.
That almost 100% of ERA’s receivables were overdue at the time of the Caterpillar offer and that the backlog of inventory & materials had grown dramatically seem like red flags to me.
The significant premium paid for a rapidly growing firm in an unpredictable economy with the problems aforementioned, would require a powerful reason to not run screaming for the exit for most experienced M & A folks.
Again and again, I have seen acquisition teams unable to slow (let alone “stop”) the sacred transaction as it gains momentum. Many a terrible mistake has been papered over by well meaning people, overconfident in their enthusiasm and the excitement of the deal.
That Caterpillar stock is only down 2% is an indication of both how much Caterpillar does know and how much escapes me.
I await new insights.