Megamerger
Categories: Company Valuation
See: Merger. See: Acquisition. See: Merger of Equals.
A megamerger is just a big merger. Behemoth companies merging to create even bigger behemoths. Think: when AOL met Time Warner, or when AT&T met Time Warner. Think: when Occidental Petroleum met Anadarko. Think: When Harry Met Sally. (Nothing to do with megamergers; it's just a great film. See it if you haven't.)
Megamergers bring in one big thing that much smaller mergers don't: regulators. Sometimes, when companies are so big and powerful, they can behave like monopolists...and generally, under American law, when you become a monopoly because your product is so good and people just use it because they love it (like Google search), that's fine-ish. But when you acquire your way into being a monopoly or use your existing monopoly power to elbow out competition in other arenas, that's not okay. Think: the way MSFT used its Windows monopoly to own office processing software, games, and all kinds of other things in the late '90s.
Bankers love megamergers because, more or less, they get 1% of the transaction when it closes. So in a $200 billion transaction, the fee might be something close to $2 billion. Not a bad payday for a few dozen lawyers, bankers, and accountants for a year.