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It is time to grade this year’s notable deals. It was a year of innovation and heightened deal-making as inversions became the rage, shareholder activists adopted more aggressive and novel strategies, the hostile takeover rose from the dead and the American deal market revived while Europe and Asia were moribund. In other words, just another year in the deal world.



INVERSION DIVERSION Inversions became de rigueur as American companies fled our shores seeking lower taxes. But it all came to a screeching halt when the Treasury Department’s new rules effectively blocked the maneuver. Some would-be emigrants like the drug company AbbVie, which tried to acquire its Irish rival Shire, quickly became renewed patriots, abandoning their acquisitions. Others like the medical device maker Medtronic, which agreed to acquire Covidien of Ireland, remained steadfast in trying to flee the United States.

An F goes to the investment bankers who peddled this transaction structure to anyone who would listen, destroying it through overuse and controversy. However, an A- goes to Burger King and Tim Hortons for pushing through a sensible inversion strategy. It simply made good sense for the combined company to be in Canada, where the stronger business was located.

TEENAGE WASTELAND Apple acquired Beats in a $3 billion transaction in search of a strategy. Other head-scratching technology deals included Facebook’s $22 billion acquisition of WhatsApp, a company with virtually no revenue, and Google’s $3 billion purchase of Nest, primarily a thermostat company. It was a feeding frenzy that minted a number of billionaires, but it remains to be seen whether this is yet another wasteful spending orgy. For now, the tech acquisition spree gets an Incomplete.

THE ALFRED E. NEUMAN “WHAT, ME WORRY?” AWARD The award (a framed picture of Mr. Neuman signed by me) goes to Jack Ma, the executive chairman of the Chinese tech giant Alibaba. Mr. Ma and Alibaba pulled off a $25 billion initial public offering, the largest ever despite a corporate governance structure that placed enormous power with Mr. Ma and his Alibaba colleagues and the fact that shareholders invested in a company that didn’t even own Alibaba’s Chinese assets. Critics, including me, warned that shareholders would one day rue this risky investment, but investors either ignored these warnings or disagreed.

BRING IT ON (PART I) Activist hedge funds remained unafraid of trying new and aggressive strategies and found successful results. Related Fund Management and Corvex Management refused to back down in the face of an unbelievable scorched-earth defense by Barry and Adam Portnoy at CommonWealth REIT. When Related and Corvex brought in Sam Zell in a proxy fight to unseat the Commonwealth directors, you knew it was done, and the rare overthrow of a REIT’s management occurred, earning the two hedge funds an A and the Portnoys an F.

BRING IT ON (PART II) Valeant Pharmaceuticals and the activist hedge fund Pershing Square Capital Management tried something more than clever, teaming up in anticipation of Valeant’s making a hostile offer to acquire Allergan. The maneuver led to complaints that the two had abused the securities laws, leaving a lingering lawsuit. Allergan fought tooth and nail. Unlike a similar contest that another company, Airgas, had faced, Allergan did not have a staggered board to make itself bulletproof. Instead, Allergan managed to find a buyer, another pharmaceutical firm, Actavis, which is buying the company for $66 billion. Allergan shareholders and Pershing Square made billions while Valeant had to settle for $300 million or so. Allergan and Pershing Square get an A, and Valeant an F, showing that once again, the activists win even when others don’t.

PAC-MAN REDUX Who couldn’t resist the battle between Jos A. Bank and Men’s Wearhouse to acquire each other? Jos A. Bank first bid for the much bigger Men’s Wearhouse, and like the grouchy ladybug in the Eric Carle children’s book, dared Men’s Wearhouse to seemingly fight back and acquire it. Men’s Warehouse took the bait and then Jos A. Bank turned coy, trying to acquire Eddie Bauer to fight off its competitor. It was all a farce, and Men’s Warehouse acquired Jos A. Bank — earning both companies an A for entertainment value alone. But an A+ goes to Golden Gate Capital for making a quick $48 million in a termination fee by allowing Eddie Bauer to be used as bait for Men’s Wearhouse.

ADVERTISING PURGATORY The termination of the Omnicom/Publicis deal showed that ego still rules in deal-making. The huge $35 billion merger crashed when the two companies couldn’t agree on who would be the chief executive. This, after having the deal outstanding for a year. Both sides earn an F.

HOSTILE LOVE The hostile takeover made a comeback, and nowhere was this more evident than in Halliburton’s $34.6 billion bid for Baker Hughes. Halliburton was able to push Baker Hughes into a quick deal with the threat of a proxy contest. It also paid a rich price by agreeing to take significant steps to satisfy the antitrust authorities. Of course, the two oil equipment supply companies are combining as the oil market collapses, but still, Halliburton earns an A.

BAD BOARDS The American Apparel board turned a blind eye for years to accusations of misconduct of its chief, Dov Charney. It finally acted to oust him only when it had no choice and Mr. Charney failed to produce continued good results at the company. The American Apparel directors then quickly fled when Mr. Charney gave all his voting rights to the hedge fund Standard General, which took control of the company and ousted Mr. Charney anyway. As I write, there are reports that Mr. Charney is about to bid to acquire American Apparel. Everyone earns an F.

EVERYTHING OLD IS NEW AGAIN Family Dollar reprised the role Dollar Thrifty took a few years ago, when the dollar store agreed to be acquired by Dollar Tree but soon found itself the subject of a competing bid from Dollar General. Dollar Thrifty, which eventually was acquired by Hertz, found itself being subject to an interloping bid by Avis. Similarly, the question became whether Dollar General was merely trying to play spoiler or was a serious bidder.

Mixed into the question was whether the Dollar General bid could pass antitrust review. Family Dollar has stayed strong so far and made a good public relations case that the more certain deal was with Dollar Tree ( although it announced on Tuesday that it was postponing a shareholder vote on the Dollar Tree offer because it lacked support to approve the deal). There are too many companies with dollar in their names to keep track, but still Family Dollar earns an A for its effort to navigate the morass.

THERE BUT FOR THE GRACE OF GOD Goldman Sachs made an embarrassing error when it advised Tibco Software in its acquisition by Vista Equity Partners. The investment bank miscalculated the number of Tibco shares outstanding on a spreadsheet given to Vista. Vista bid $4.3 billion but ended up paying $100 million less because of the error. The Tibco board took a pass on trying to penalize Goldman, and the deal moved on, with even the Delaware courts finding no foul. Goldman’s error led all to scrutinize their spreadsheets a bit more, for the time being at least. This is an obvious F, though it is a sin any of us could have committed.

POTPOURRI It is now Year 2, and we still don’t know whether Herbalife is a fraud, as Pershing Square claims, or a strong business under inappropriate attack, as Herbalife says. I give the markets an F for failing to find out which is right.

THE OSTRICH AWARD This coveted award, a statue of an ostrich (signed by the entire DealBook staff), goes to the boards of Darden Restaurants and Sotheby’s. Both boards furiously resisted shareholder activists. Darden went as far as to sell Red Lobster despite shareholder protests. In the end, both boards lost, with the entire Darden board replaced and the chief executives of Sotheby’s and Darden departing. The boards of both companies showed the foolishness of furiously resisting shareholder activists — it only enriches the advisers.

All the best in the new year. And a bit of advice for all the deal makers out there: clean out your email boxes.