Big Companies

Big companies like to do business with big companies. Traditionally, with some exceptions, large companies can't afford the risk of entering into contract with a smaller company in the form of partnership, service agreement or other arrangement. We have seen this our entire investment career. Whether through acquisition, accounting, legal or research and development big companies will always work with a larger company when possible.

We see this in China right now...the country's leadership is turning to the world's best most successful companies for their brightest people and cheapest capital.

The merger mania either through private equity or strategic acquisition...the largest companies are transacting daily. Notice the smaller companies are not in the news...

As long as the governments don't step in this will continue....the profits to be had are too great...stay with the best managements, balance sheets and strategic assets....

Barkly seen here is looking for the big fish...ignoring the smaller animals in the background.