The CFO 411: The High Cost of a Failed Plan

Cfo Letters (or Chief Financial Officer) On The Card Held By A M

Here’s a distinction that no one will be celebrating: There have been nearly $400 billion in failed mergers and acquisitions so far in 2016, making this a banner year in unsuccessful deals. Analysts point to picky regulators, hesitant targets, and the mercurial economy as three factors that have made M&As so troublesome recently. Another notable number that rocked the headlines this week: The Obama administration unveiled new overtime eligibility rules that would raise the pay threshold to $47,476—more than double the current cut-off for workers who are eligible for time-and-a-half pay.

4 need-to-know headlines

1. Failed M&As hit record high

Bad news for fans of the proposed Staples and Office Depot acquisition: A judge agreed to the Federal Trade Commission’s request for a preliminary injunction on antitrust grounds. That deal joins a record-breaking number of failed mergers and acquisitions: Nearly $400 billion of U.S. mergers have been unsuccessful so far in 2016, according to data from Dealogic. And when those deals bite the dust, companies are typically required to pay breakup fees—to the tune of more than $4 billion so far this year. (via Marketwatch.com)

2. White House issues massive expansion of overtime eligibility

Brace the company coffers for a sharp uptick in overtime pay: This week the Obama administration released a long-awaited rule that will make millions more Americans eligible for overtime pay. The new rule doubles the threshold at which executive, administrative, and professional employees are exempt from time-and-a-half pay to $47,476 from the current $23,660. That shift is expected to affect roughly 4 million additional workers. And while some businesses are embracing the change, others are expected to shuffle salaries and departments to get around the pay hit. (via Nytimes.com and Washingtonpost.com)

3. Retail’s delivery disruption hits fresh urgency

Amazon—and its next-day or next-hour delivery options—could be reshaping the retail landscape for good. Macy’s recently reported its worst quarterly sales since the recession, and both Kohl’s and Nordstrom posted a sharp drop in both sales and profits at existing stores. Foot traffic, it seems, might be going the way of the dodo bird. To stay relevant, some retailers are rethinking how they reach customers. Walmart announced that it’s now testing a two-day shipping subscription service, and leveraging its massive transportation fleet and logistics chops to build a regional delivery network. All eyes in the industry are on the world’s biggest retailer, and if Walmart succeeds other stores will likely follow suit. (via CFO.com and WSJ.com [log-in required])

4. Fed doubles down on financial stability

Better order more mailboxes at HQ: The U.S. Federal Reserve Board has expanded its financial policy office to include a new Division of Financial Stability. The new division has been tasked with monitoring banks and markets and conducting research, all with the larger goal of spotting vulnerabilities in the U.S. financial system and (hopefully) suggesting course corrections before those weak spots are exploited. (via Reuters.com)

Sound bite of the week

“I sort of view India as where China was seven to 10 years ago.” —Tim Cook, Apple’s CEO. Many multinationals that have already expanded into China are paying close attention to the IT giant’s plans in India. Cook is visiting the country this week, laying the groundwork for Apple to open local stores and sell second-hand phones. But analysts warn that the global companies won’t be able to simply copy/paste their strategy for entering the Chinese markets onto India. One major stumbling block: Indian consumers have just a fraction of the disposable income of Chinese consumers. (via WSJ.com [log-in required])

The stat: $150 million

The amount that Yahoo CEO Marissa Mayer has said the company shells out annually to offer employees free food. But while critics cluck that the company is coddling millennial workers with unlimited lattes and lunches, others point out that incentivizing workers to stay at their desk for even an extra 30 minutes can more than offset the cost of a meal. Shelling out $25 for free food and drinks in a cafeteria can actually pay off double every single day. (via Strategy-business.com)

 

4 Top Stories + 1 Key Statistic + 1 Industry Quote = The CFO 411
The CFO 411 is our weekly news roundup that brings you top headlines, data points, and sound bites to keep you in the know. Follow our updates on LinkedIn for more finance must-reads.

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