Caterpillar – Call Me (I can help)

big_zebra_splshGod 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.

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