V NThe news about a bank that bought a big savings and loan in 2006 and now has 20 billion of losses on the assets bought, and whose stock is down 80% this year, brings out another qualitative point about human nature. "Why sell my company?" the NCZ ad ran. The answer was pictured in the next frame: "fire and lightning were about to strike".

There is always an avalanche of sellers in an industry right before it is ready to go down the tubes. The conglomerates always get stuck with these. And once they run out of accounting maneuvers, the piper must be paid, as in this case. Usually the sellers insist that the deal have no contingent liabilities or warranties. That the buyer conduct his due diligence, and then never come back at them. "It wouldn't be feasible, as we're a public company" or "the outside stockholders would never go for that potential hanging over their heads."

Buyers should beware when almost all firms in an industry are for sale. And it takes more than 10 minutes and a one-page contract, and the willingness of the seller to find a home where the buyer won't interfere, to protect yourself. Query: When will the chickens come to roost for those active in this area in the corn belt?


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