The Deal Economy 2012

2010 Results

It's unlikely those oiled with cash will apply the brakes anytime soon. At times like this, it's helpful to remember that those with cool heads and clear strategies tend to land the real prizes -- deals that generate value for buyers over the long term.

Determining who will end up ahead when the M&A dust settles, however, can be much like betting at the racetrack. That's why performance track records matter when trying to determine who the smart dealers already are. Do those in question have strong, cost-conscious decision makers and well-thought-out strategies? Do they have target deals with real potential value? Or do they have a history of overpaying and poor deal integration?

These are the kind of questions that inspired The Deal magazine to launch its Most Admired Corporate Dealmakers survey three years ago. The survey canvasses those in the M&A industry who know firsthand which dealmakers are the best -- corporate executives, bankers, lawyers, private equity professionals, arbitrageurs, portfolio managers and M&A services providers.

In our third consecutive annual survey , the winners across five industries are transaction-intensive companies that have a few things in common: They are cash-rich, with strong balance sheets; are cost-conscious; and have disciplined strategies and a growing appetite for overseas markets. Our 527 respondents voted on three years of deals, from 2007 through 2009 (the survey closed Aug. 13). Those who took top honors are: 3M Co. in industrials; Abbott Laboratories in pharmaceuticals/biotechnology; Coca-Cola Co. in food and beverages; ­Hew­lett-Packard Co. in information technology; and J.P. ­Morgan Chase & Co. in financials.

According to data from The Deal Pipeline and Standard & Poor's Capital IQ, the five sector-winning teams closed more than $42 billion in deals for the three-year period. This activity appears to have made a positive contribution to their respective market shares. Across all five sectors, while aggregate market caps of U.S. public companies trading on primary U.S. exchanges contracted 22% from 2007 through 2009, this year's winning companies expanded their market cap by an average of 9.6% over the same time period.

They are part of a select cadre of deal-savvy companies that have shown an ability to thrive even during financial crises and economic instabilities. Chris Ruggeri, an M&A Advisory Services principal at Deloitte Financial Advisory Services LLP, says that, overall, there's been a big shift in the way companies have assessed deals in recent years, a response in part to the financial crisis of 2008, to the need to regain investor confidence and to more conscientious boards.

"There's been a rise in more due diligence and measured, smart dealmaking. Companies today are revisiting everything, from the deal process to minimum requirements for deal approval. Everything's being recalibrated," says Ruggeri.

The five companies profiled in the following pages have already proved their ability to find value and act decisively in the midst of market chaos. As M&A competition heats up and more companies join the fray, such skills will matter more than ever.

About the Survey

The survey data was supplied by The Deal Pipeline and Standard & Poor's Capital IQ unit and used to establish a shortlist of candidates in each of the winning company's industries. Our survey firm, Applied Research-West Inc., tabulated the results canvassed from corporate executives, private equity investors and M&A advisers who were asked to rank each corporate dealmaking team on a qualitative basis on four criteria: overall strategy and choice of targets; value (or price paid/received, compared with the value extracted); execution and quality of the deal team. For more details about the survey and the lists, please visit www.thedeal.com/mostadmired. As for next year's survey, that's already under way. Suggestions? We welcome them. Please send any to me, Suzanne Miller (smiller@thedeal.com).

"Great buys," says Frederic Burke, the president of Washington-based Johnston Lemon Asset Management Inc., describing 3M's proposed purchase of Pasadena, Calif.-based Cogent Inc. and Tel Aviv-based Attenti Holdings SA.

Ten days later, 3M struck again, this time agreeing to pay $810 million in cash for Arizant Inc., a patient-warning systems medical devices company based in nearby Eden Prairie, Minn.

"They've been doing [dealmaking] for some time," says Burke, whose asset management company holds 3M shares. "They have a formula that works."

For 3M, the Cogent, Attenti and Arizant deals mark a return to form. In 2007, 3M acquired 16 companies. That number jumped to 18 in 2008. Last year, by contrast, 3M made just four acquisitions, for a scant total of $23 million. A snail-like pace continued into the first quarter of 2010, with a single acquisition.

"We were certainly selective in the deals we did last year," says Mark Copman, 3M's vice president, corporate development. Now? "We are looking," he says.

"We continue to think of acquisitions as an adjunct to organic growth. To the extent we can do things organically, we want to," continues Copman, who heads up the company's 20-person dealmaking team, spread among the Minnesota global headquarters, Brussels and Shanghai. "To the extent that acquisitions are helpful as an adjunct to that growth, we'll be looking at them. It could either be markets or interesting technologies that help us."

This year, The Deal magazine readers selected 3M as best industrials dealmaker. It beat out Danaher Corp., another longtime corporate conglomerate, which was actually far more acquisitive than 3M in 2009.

While he didn't participate in the polling, Kendall Anderson is typical of the support the company gets from the investment community. Anderson, who heads Anderson Griggs and Co., which does business as Anderson Griggs Portfolio Management in Rock Hill, S.C., tends to frown upon highly acquisitive companies. But he makes an exception for 3M, a stock his company has bought for years. "They've been making 10 to 20 acquisitions a year, and they've been doing it forever," he says. "They've been able to make all these acquisitions, but still spend on R&D, which is critical, pay dividends, buy back stock and raise shareholder equity."

Anderson believes that 3M ups its chances of success in its acquisition strategy with two basic approaches: The company tends to buy smaller, bolt-on acquisitions, and it uses cash. "Lots of acquisitions they make are just little blips on the screen," says Anderson. But he says they add up. "With all the experience they have in acquisitions, I believe the ultimate payoff will be 1% to 2% greater growth in the future."

According to Copman, 3M's average deal size is $50 million. That relatively low threshold may surprise some, considering 3M's revenue totaled more than $13 billion for the first half of 2010. But Copman, who came to 3M in 2003 after more than a decade as an investment banker with Piper Jaffray & Co., stresses that while these smaller acquisitions are dwarfed by 3M as a whole, "a deal of that size could be material to the division it's part of."

That's key to the acquisition strategy and how Copman and his team decide whether to support a deal.

"If it's not going to really help the division to grow their business, then we push back," he says. "You can execute the deal perfectly, and it might not be material to the overall division -- then it's an opportunity cost."

Those in the divisions identify potential targets, as do those in business development, who get approached by both principals and intermediaries. "When you've looked at what we've done, there's a good balance between top-down strategic priorities and bottom-up requests for capital," Copman says.

The April acquisition for an undisclosed price of a majority interest in Japan's A-One brand consumer and office labels exemplifies the bottom-up approach. "People in the division were very interested," says Copman. "They cultivated the relationship with the senior management there." Certainly the two companies knew each other. A-One is more than a half-century old. 3M, in a joint venture with the Sumitomo Corp., has been in Japan almost as long.

By contrast, the $1.2 billion acquisition of safety and security products-related Aearo Holding Corp. two years earlier originated with a financial intermediary.

According to Copman, "We tend to review everything centrally through a three-step preacquisition review process." Copman says that his team may look at 10 to 20 times as many potential deals as the number that are actually consummated. "Typically, we like to see deals that are part of the strategic plan for the business," seeking a company, he says, that assists a 3M business in "a road map for how it wants to grow. We review them. We ask the typical build-buy questions: Are we better off buying this or doing it ourselves?"

If 3M pursues an acquisition, a two-person deal team -- one from business development and one from the business unit itself -- usually oversees due diligence and must sign off on approval. Specialists within 3M help handle legal, real estate, human resources, insurance, IT and other issues.

What's telling about recent acquisitions is the geographic spread. That reflects 3M's global presence. Of the seven announced deals this year, only Cogent and Arizant are U.S.-based. The others include two in Canada and one each in Brazil, Japan and the U.K.

"The U.S. is important to them, but they're used to working in, making profits in, countries where there's stagflation, inflation, communism, socialism -- you name it," says Anderson.

There are two obvious gaps in 3M's M&A activities, however, and that's India and China. While the company sees these markets as critical to its future, deals have yet to materialize. Copman says 3M continues to look for opportunities but is cautious. "We have such strong growth prospects in both places that we really have to balance" the risks inherent in an acquisition "with continuing to grow and do what we can do organically."

3M is known in the investing community not only for its preacquisition due diligence, but also for its post-­acquisition integration. "I don't recall an integration that wasn't successful," says Burke. "They let the acquired company do their own thing. They step in only when necessary."

The company doesn't completely shy away from divestitures. "When they make mistakes, they admit it," says Anderson. "They've had winners and a few losers. The winners are doing very well. They eliminate the losers."

Most notably, the company sold off in three separate transactions for a total of slightly more than $2 billion its pharmaceutical division, a process that stretched from late 2006 into early 2007.

"That was a strategic decision," says Copman. "If we need scale on a business and we're not willing to strategically invest in order to get that scale, we're better off getting out of it."

However, Copman says he and his crew also do their best to dampen enthusiasm in divesting for the sake of divesting. "We can't just look at the asset discretely. We have to look at what it's covering from an overhead standpoint and make sure that it enters into the analysis," he says. "We have to look at the all-in value to us covering the overhead elsewhere, since we may lose the cash flow that covers that overhead."

Copman dismisses the notion that 3M operates substantially differently than strategic competitors when it comes to M&A. "I can't say that there's anything unique about what we do," he says. "It's an engineering culture. We try to create some processes, try to explain those processes to people internally and just make sure that we follow them. ... We try to be honest about lessons that we've learned internally and things we can do better. We try to track the deals that we've done and be honest about their performance. We try to make sure that we continue to do a good job." - Matt Miller

"This is one of the few times Abbott has been aggressive with pricing," says Damien Conover, an analyst with Morningstar Inc. "Even if there's huge growth in India, there's still a fair amount of risk and volatility around that growth."

Analysts and investors have long regarded Abbott as one of the industry's savviest dealmakers, evident yet again in this year's The Deal magazine's Most Admired Corporate Dealmakers survey, where Abbott cleaned up as best among its peers in the healthcare sector for a third consecutive year.

The Chicago-based pharma, medical and nutritional products giant is known for paying conservatively for its targets (at the lower end of the 4 or 5 times multiples on sales that its peers typically fork out) while delivering consistently robust returns for shareholders. It has been known to track smaller companies for as long as 10 to 11 years before closing in -- all the while analyzing data, seeking proofs of concept and clinical trial results -- that is, the kind of information that confirms the risk is worth it.

Bill Chase, 42, Abbott's vice president of licensing and M&A, predicts the Piramal purchase will be worth every penny of perceived risk. "We're an extremely financially focused company, so we don't believe we're overpaying. At the end of the day, if you've got a market that has tremendous growth potential, the value that's going to be required to buy the No. 1 position in India -- which we ultimately did -- is going to look expensive relative to normal deal comparisons." He says Abbott did extensive homework on "all the India targets" and decided Piramal fit best with Abbott's strategic intent to grow in the overseas branded generic-drugs market.

Chase says his 50-member team -- a group that works closely across major pharma, diagnostics, nutrition and medical devices businesses -- screens thousands of targets in the therapeutic markets every year, but always with the same discipline. "We evaluate every target based on the exact same criteria -- foremost, strategic fit," he says. "Second, will the target give us an opportunity for market leadership? And finally, every single target has to deliver the financial performance we feel we need to commit to our shareholders." Value, he says, is ultimately assessed through net present value, return on invested capital and the ability to provide a payback to shareholders over a reasonable time frame, depending on the type of deal.
Miles White, Abbott's CEO for the past 12 years and one of the longest-serving chiefs in the industry, sets strategy, while Chase, who was promoted from his job as treasurer in February after predecessor Sean Murphy retired, says his primary job is to deliver on those mandates. Chase, who has worked in Abbott's finance group since joining the company in 1989, says, "The strategy and the way we run deals at Abbott is ultimately set by the highest level of the organization, which is Miles." He has no plans to tinker with that strategy as he settles into his new job. "Miles is very clear on strategic areas he wants to focus on and is very involved in developing the wish list that we need to execute on. So it's not like I'm going to come in and flip the Abbott strategy on its head. The strategy has worked really well, and my job is to execute."

Strategic discipline will be essential as competition intensifies. Abbott reportedly edged out other Piramal bidders -- GlaxoSmithKline plc, Pfizer Inc. and Sanofi-Aventis SA -- to grab the coveted No. 1 position in the pharma industry in India, one of the hottest global growth markets for the sector. Global drug companies have been racing to build share in emerging countries such as India to cope with increased competition from generics in their home markets as products lose their patents. And replacing blockbuster products can be very difficult, one of the reasons acquisitions such as Piramal are gaining in importance. Chase anticipates that Abbott's pharma business in India alone will generate $2.5 billion in sales by 2020. "That's the size of a very, very nice pharma blockbuster," he says.

In the meantime, Abbott's discipline continues to earn respect. Allen Bond, an analyst with Jensen Investment Management Inc. in Portland, Ore., says Abbott has been part of his group's elite portfolio of stocks for the past several years -- those few that have been generating a 15% return on equity for 10 consecutive years. "We like Abbott's fundamentals -- they have a very strong balance sheet, very consistent free cash flow and high return on capital. They also have a diverse business model, which limits exposure to one part of the medical world," he says.

That diversity has been fueled by a string of deals in recent years, a pace that's been accelerating. Last year, the value of its completed acquisitions and divestiures jumped to $4.1 billion, from just $700 million in 2008. So far this year, those numbers have surged to $11.1 billion. Analysts see acquisitions as a way to help Abbott diversify its product portfolio to particularly reduce its dependence on Humira, a drug for treating autoimmune diseases that contributed $5.5 billion to sales in 2009 but whose patent expires in December 2016.

The company is seeking growth across the board, from acquisitions to partnerships and licensing deals. In May this year, Abbott announced a licensing and supply agreement with Zydus Cadila of India for a portfolio of pharmaceutical products that the company plans to commercialize in 15 emerging markets. It also created a so-called stand-alone established products division aimed at expanding the market for Abbott's pharma portfolio outside the U.S., particularly in emerging markets.

Finding good acquisitions is a constant challenge. "It's tough. You have to be very selective and careful in the targets you pursue," Chase says. "You have to go through a lot of companies, study a lot, talk to a lot of people." He says Abbott is focused on building up innovative technologies -- a strength that won the company high marks among survey participants -- as well as bulking up in emerging markets.

"We base our business model on innovative technologies in areas that will ultimately meet high unmet medical needs. That filters through the global targets we pursue," Chase says. Emerging markets will play a pivotal role in that growth. This year, the company expects to generate $8 billion, or 20% of its total sales, from emerging markets, growing to $14 billion over the next five years. "The emerging markets will be a very important part of our strategy," he says.

Morningstar's Conover expects Abbott to deliver. "They are one of our top picks. We think they're undervalued with strong growth potential and are going to be a story where, every quarter, they'll put up good numbers, and hence the multiples will increase." If he's right, the Piramal price could end up looking compellingly inexpensive. That's the kind of foresight Abbott's counting on to keep it ahead of the competitive pack.- S.M.

One of the company's biggest challenges is remaining nimble as it grows -- keeping ahead of emerging brands, new technologies and prospective deals. It's a 24-hour job. Keeping track of all the moving parts is the "ultimate task of multitasking," jokes Marie Quintero-Johnson, 43, the company's vice president and director of mergers and acquisitions since March 2002. Her team of 20, divided by geography and sometimes by specialty, holds a conference call once a month to talk about the big issues. But from her office in the company's Atlanta headquarters, she keeps a pulse on every project or deal around the world every day.

Today Coke is the largest drinkmaker in the world, with more than 500 brands spanning 200 countries. In that regard, it has already achieved an enviable goal. Over the past couple of years, Quintero-Johnson says, "our overarching strategy was to have the optimal manufacturing infrastructure in each country to grow our volume and value share at the rate in which we want to grow it."

That strategy culminated in February when it announced plans to buy the North American business of it largest bottler, Coca-Cola Enterprises Inc., for approximatley $12 billion. But growing through big acquisitions can take the company only so far, she says. "There's a finite set of companies. I can tell you that every bank that comes here brings me the same set of companies." That set, of course, also gets shopped to Coca-Cola's major rivals. Quintero-Johnson doesn't spend her time waiting for the phone to ring. Instead, she's constantly scouring for new ideas on how to drive growth. More recently, that has meant exploring new frontiers in technology and environmental sustainability to help increase productivity.

When an entrepreneur recently came to her with a new refrigeration technology, for example, it struck a chord, particularly for its potential uses in places like sub-Saharan Africa or India. Of this newer technology, she says: "This is the area that I am really excited about getting our arms around because I feel like it's a huge untapped possibility to drive productivity in our business."

Quintero-Johnson's team is also embracing new ways to drive sustainability. "When you start adding sustainability, it becomes a huge opportunity to bring in technology. We are thinking about sustainability and how that can manifest itself with our business. It's not about water sustainability or recycling. It's addressing the carbon footprint and all of the things that go with that. I think that's where all consumer products are going."

It's a future she's investing in. Last year, Coke opened up its first bottle-to-bottle recycling center in South Carolina as a joint venture with United Resource Recovery Corp. LLC with the goal of boosting recycled material in its plastic bottles to 10% from 3%. According to Plastics News, Coke, which didn't disclose terms, invested $45 million to $50 million in the project, including a loan and an equity stake. The center will help offset the rising cost of polyethylene terephthalate, the material from which the bottles are made.

Expect more such transactions down the road. "We have to work on changing our mental model on how we define transaction structures and opportunities," Quintero-Johnson says.

As opposed to, say, Cisco Systems Inc., which swallows entire companies in one gulp, she says Coke isn't interested in buying a patent or an intellectual property right. "What I really want is to continue to have a relationship with the person that invented the technology so they can continue to improve on that."

This newer focus is changing the way Quintero-Johnson's dealmaking team looks for opportunity. Rather than meeting with investment bankers to discuss up-and-coming brands for sale, she has encouraged her team to do their own scouting. "[It's] really about pounding the pavement, shaking hands and making relationships in the right place," she says of the venture capital community.

Quintero-Johnson also learns quickly from what doesn't work. In the past, "we made investments in really cool little brands ... but we put them in our system, and they were not big enough for a large-scale system to nurture," she says. "What we learned from that experience is that you need an interim phase." This has proved invaluable to the company, which is always looking for fresh ideas to grow its portfolio of brands.

The venturing and emerging brands, or VEB, division, headed up by Deryk van Rensberg, was established 3-1/2 years ago to create a bridge between the proof-of-concept stage and the commercialization and mass-marketing stage. The group has about 15 people whose job it is to ferret out and track emerging brands. When the companies get to a level of stability or size that a partnership with Coke makes sense, Quintero-Johnson's group will engage them in discussions. As the targets are often so varied, the team is regularly required to wear multiple hats. "We are subject matter experts, and we are therefore consultants to the field, but we also have a governance role to make an objective recommendation to the [other] company's management," she says. "That's always a fine line."

Through VEB, Coke purchased a 40% stake in Honest Tea Inc. in 2008, a then-10-year-old company based in Maryland, and has an option to buy a majority stake next year. Last year it nabbed a minority stake for less than $15 million in Zico Beverages LLC coconut water, and a 10% to 20% stake estimated to be worth $45 million in U.K. bottled natural smoothie manufacturer Innocent Ltd., according to The Deal Pipeline. Coke did not disclose terms.

Quintero-Johnson also relies on metrics established by the VEB unit to differentiate between brands that have the potential to be sensations and those likely to flop. A few years ago, it conducted a study on how many brands were launched in the past five years in the U.S. and how many survived, with an emphasis on characteristics of success. The results were then cross-referenced with brands that had been successful in the Coca-Cola system. From that, Coke was able to derive a system of evaluation that guides Quintero-Johnson in her search.

Quintero-Johnson says her team is always working to come up with ways to improve efficiencies to keep its competitive edge as sharp as possible. "The big opportunity for us is to figure out in a methodical way how to canvass the world instead of waiting to react to the entrepreneurs coming to us." The goal, she says, is to "figure out a methodical way to make sure that we are identifying all of those opportunities to improve our system in any way possible."

It's this kind of constant reinvention and entrepreneurial commitment that can allow a global behemoth like Coca-Cola to continue gaining market share around the world. It's a 24-hour commitment, but one that Quintero-Johnson seems to relish. She says: "Having the time to get up to speed with the pace of the change in the outside world is the biggest challenge and the biggest opportunity." - Sara Behunek

During Hurd's five-year tenure, HP used acquisitions to widen its focus from PCs and printers to becoming a broad-based provider of IT services and data center technologies to the world's largest companies. Its prowess also won it first place among IT acquirers in The Deal magazine's latest Most Admired Corporate Dealmakers survey, which looked at three years of deals through 2009.

A lot has happened at HP since the beginning of this year, including Hurd's ouster over alleged business-expense-reporting improprieties and a bare-knuckled bidding war for storage technology company 3Par, where it beat out rival Dell Inc. with a hefty $2.3 billion cash bid. The multiple-topping bids and the sky-high premium -- HP ended up paying triple the roughly $10 value of each 3Par share before Dell unveiled its first offer -- have raised questions. Does the 3Par deal represent the purchase of a strategically important asset for HP's product set, or is it a defensive move to take the target out of Dell's hands? Has the Hurd-less HP lost its rudder? Those who support the deal say it gives HP one of the few companies with storage networking that's easily scalable to handle rapidly growing data storage needs of large enterprises.

But then there are the critics. "For all the mud that has been thrown at him, it's unlikely Hurd would have engaged HP in a bidding match like this," says Rodman & Renshaw LLC analyst Ashok Kumar. "HP wrapped the 'strategy' theme around this to justify it to shareholders, but it showed a lack of financial discipline." HP declined to comment for this article.

Financial discipline was a hallmark of Hurd's tenure at HP. During his five years as CEO, he struck some of the company's most lauded deals, including its 2008 purchase of technology services provider Electronic Data Systems Corp. for $13.9 billion, which boosted its IT services offerings from a $16 billion annual revenue operation to one that posts roughly $40 billion in annual revenue. Observers viewed the EDS deal as a critical step to catch up with services leader IBM Corp. (the deal leapfrogged HP from fifth to second place behind Big Blue). And they have praised the deal's cost-cutting potential (HP said it would squeeze $1.8 billion in costs from EDS in the three years post-closing).

In the roughly 20 acquisitions (worth an aggregate of roughly $19 billion) HP struck over the past 3-1/2 years, its dealmaking team has gained admiration for its streamlined decision-making process.

On the legal side of the team, general counsel Mike Holston, a former U.S. assistant attorney, gets involved in dealmaking with broad legal issues, while his direct report, Paul Porrini, oversees the nuts-and-bolts corporate securities issues along with Rick Arnold, who reports to Porrini and oversees a team of deal-focused lawyers.

Shane Robison, HP's executive vice president and chief strategy and technology officer, leads deal negotiations. Advisers who have worked with the HP team on some of its largest transactions say that dealmaking efficiency is a key differentiator from other large tech buyers.

"With some clients, issues get raised on a deal, and the client doesn't know how decisions will get made, or the process gets bogged down by too many decision makers," says one adviser who has worked with the company. "HP's team has a continuity, a professionalism and discipline, with clear lines of authority and communication," he says, adding: "The folks guiding M&A at HP have been doing so there for several years and have a strong sense of what HP is looking for and how it fits into the business units."

HP's drive to expand through acquisitions is part of a broader push over the past several years by large information tech vendors, including IBM, Cisco Systems Inc., Dell and others, to cater to the increasing needs of large enterprises to manage far-flung workforces and, more critically, an unconstrained growth of business data.

Big companies want a complete set of products to build, manage and optimize data centers -- the climate-controlled nerve center of their IT systems -- which encompass storage drives, servers, software and networking equipment. This demand is luring companies like HP, which is attracted by the whiff of growth as its own more traditional market, including software and PCs, matures.

A land grab has been expected for some time but has heated up recently. Oracle Corp. surprised many last year with a foray into high-end servers via the $7.4 billion acquisition of Sun Microsystems Inc. Cisco sent tremors through the enterprise tech market last year when it announced a new line of servers to complement its already industry-leading networking offerings. It was part of a push to offer what Cisco calls the "unified computing system"­ -- a seamless offering of data storage, networking, computing and virtualization systems for data centers.

HP realized it needed to quickly boost its own data networking offerings to remain a viable alternative to Cisco, and it responded in November by unveiling the $3.1 billion acquisition of 3Com Corp. HP has emphasized what the purchase means to its product lineup and its ability to compete with Cisco, the 800-pound gorilla of the market.

"We know we are extremely well positioned to be a very significant player in networking -- an alternative that hasn't been there before," Marius Haas, an HP senior vice president and general manager of its networking business, told The Deal after the transaction closed in April. The deal followed nine months of due diligence on "every player in the market."

After the initial surprise wore off (3Com had a tarnished brand and was not doing well in the U.S. and European networking markets), analysts praised the acquisition for bringing HP networking equipment that was comparable to that offered by Cisco, and lower priced.

"HP has become the legitimate second vendor," says Yankee Group Research Inc. analyst Zeus Kerravala. HP recently said 3Com is performing above expectations and other acquisitions in the enterprise market have flourished too. Storage technology vendor LeftHand Networks Inc., which HP acquired for $350 million in 2008, doubled its revenue in HP's most recent fiscal quarter, for example.

As for the future, the pressure to strike significant M&A transactions isn't about to let up, as competition continues to build among providers of enterprise technologies. Hurd's fate is a perfect example of how heated rivalries have become. A month after Hurd left HP, he was hired by Oracle to replace departing co-president Chuck Phillips.

"There is no better executive who understands the competitive landscape than Mark Hurd," says JMP Securities LLC analyst Pat Walravens. "Oracle now has a general who has an exact blueprint of the enemies' battle plans."

HP agrees, quickly suing to block the move, arguing that Hurd joining Oracle would amount to handing over trade secrets and confidential information to a rival.

Regardless of how the Hurd drama develops, HP continues to build its balance sheet into a war chest for acquisitions. In its fiscal third quarter, which ended in July, the company reported $3.3 billion of cash flow from operations and free cash flow of $2.1 billion, and it says it expects cash flow to remain strong. HP's cash balance sits at roughly $14 billion, not accounting for the pending 3Par deal. Some of it will go toward stock buybacks, with roughly $4.9 billion remaining in HP's previous buyback program and an additional $10 billion announced in August.

Some viewed that $10 billion buyback authorization, which was unveiled in the midst of the 3Par struggle, as a signal to shareholders that it won't be repeating its involvement in such a pricey battle for a coveted asset anytime soon. If so, HP might just have a better shot at maintaining its reputation as a measured tech acquirer worthy of its Most Admired status. - Olaf de Senerpont Domis

Perhaps no other U.S. company benefited as much from the financial crisis as J.P. Morgan Chase, the winner of The Deal magazine's Most Admired Corporate Dealmakers award in financial services.

After spending the first few years at J.P. Morgan cleaning up the bank -- Dimon was part of the 2004 purchase of Banc One Corp. in Chicago -- he swung to M&A with the coming of the financial crisis. He rapidly expanded its U.S. investment bank and retail bank through rock-bottom acquisitions of failing Bear Stearns Cos. and Washington Mutual Inc. in 2008. He also bolstered the European investment bank by turning a 50% joint venture with London-based stockbroker Cazenove Group Ltd. into a full-fledged acquisition.

In the process, Dimon may have reinvented the definition of "bargain." During 2008, after a Bear Stearns shareholder revolt forced him to raise his firm's initial $2 a share price to $10, Dimon paid $2.4 billion for the No. 5 investment bank in the U.S. In doing so, he scooped up Bear's securities clearing services, prime brokerage, energy trading desk and real estate at a 94% discount to the company's 2007 market capitalization.

For WaMu, Dimon paid $1.9 billion to receive $307 billion in combined assets and $188 billion in total deposits from what had been the country's largest thrift. The deal gave J.P. Morgan 5,410 branches and $911 billion in deposits.

The acquisitions vaulted J.P. Morgan past Citigroup Inc. and Bank of America Corp. to become the largest bank in the U.S. by market value, worth $160 billion. That compares with BofA's market cap of $135.5 billion and Citi's $113.3 billion. As one of the few big banks without serious mortgage problems, J.P. Morgan was also able to grow organically, particularly in the middle market.

Dimon hardly worked alone. J.P. Morgan has a sizable investment bank with lots of talent deeply conversant in dealmaking, and the bank itself had been built from a series of major deals over the years. The corporate deal team, which considers acquisitions for the bank, consists of Jay Mandelbaum, head of strategy and marketing; CFO Doug Braunstein; and Tim Main, head of the financial institutions group. On the crisis deals, the bank's senior dealmaking team included then-CFO Mike Cavanagh, now head of treasury and securities services, who followed Dimon from Citi to Banc One and who effectively led integration efforts. Jimmy Elliott, global head of M&A, organized bankers and lawyers on the deals, and Steve Black and Bill Winters, co-heads of investment banking, served as Dimon's point men. Braunstein, at the time Americas investment banking head and now CFO, led the negotiating with Main and Steve Cutler, the bank's general counsel.

Moreover, Matt Zames, head of the bank's derivatives trading group, was brought in to analyze Bear's books the night the deal was put together, while Charlie Scharf, head of retail financial services, led the bank's integration of WaMu.

"The bench is very deep," says Richard Bove, banking analyst for Rochdale Securities LLC.

Still, what makes Dimon key is that so many of these crisis transactions were thrust upon him under tight, pressure-packed deadlines. These were, given the meltdown taking place, all potentially bet-the-bank deals. Dimon himself had to be involved, particularly as high-level contacts and negotiations took place across Wall Street and among the firms and Treasury and the Federal Reserve. In short, the dealmaking at J.P. Morgan during the crisis was unusually CEO-centric.

For example, Dimon famously was attending a family gathering at a Manhattan restaurant on his birthday when he received a call from Lazard's Gary Parr, who told him Bear Stearns CEO Alan Schwartz needed to talk to him. Schwartz asked for a $30 billion loan. Dimon then called New York Fed chief Timothy Geithner and Black, who was on vacation. Over the weekend, the loan turned into takeover talks; Treasury Secretary Henry Paulson and Geithner implored Dimon personally to do the deal, and he pressed them to backstop some of Bear's assets and trades. It turned out to be a huge winner, even after the price was adjusted upward.

"Dimon gets very involved," says James Woolery, a partner at Cravath, Swaine & Moore LLP, the law firm that advised Lazard on the Bear deal. "He's a very strong leader, and that kind of clarity and swift and sure decision making is key."

While some critics argue that U.S. deals were handed to J.P. Morgan by the government, the bank certainly showed that it could move quickly and, in retrospect, prudently. Peter Kovalski, fund manager at the Alpine Funds, notes, "The best failed-bank transactions were early on [in the crisis]. WaMu should turn out to be a good one." And, while some analysts deemed the $1.7 billion J.P. Morgan paid for Cazenove high, others say it's a bargain considering the bank gets Cazenove chairman David Mayhew, one of the best-connected bankers in London, and provides a platform to expand its global investment banking operations.

Besides, nailing a bargain is one thing, but making it work is another, particularly under incredibly stressful conditions. "Integration is one of the things they really excel at," says Larry Tabb, co-founder of research firm Tabb Group LLC. "People often underestimate the challenge in doing it."

Despite the rancor over price, J.P. Morgan absorbed Bear operations and employees with little disruption, and even integrated its technology trading platform in less than 18 months.

Dimon has expertise in integration. Meticulous about details, he's known to carry a sheet of paper in his pocket, ticking off a running to-do list. He has a mania for efficiency, a trait he shared with former Citigroup CEO Sandy Weill. Dimon spent 13 years with Weill as they built Commercial Credit, then Travelers Group, then Citigroup via acquisitions. Dimon spent years on nearly every aspect of the dealmaking process. In 1998, however, Weill fired Dimon from Citi after a messy falling out.

In 2000 Dimon returned to banking at Banc One, which had stumbled after decades of its own M&A-driven expansion. That year the bank posted a $511 million loss, and Dimon embarked on an efficiency and cost-cutting drive, setting aside $1 billion for loan losses, reconciling the bank's various back-office operating systems and clawing back perks like pagers and cellphones. In his first year, Banc One's stock price shot up almost 40%. By the end of 2003, net income totaled $3.95 billion.

After Banc One merged with J.P. Morgan and Dimon took over as CEO at the end of 2005, he closed down company gyms, stopped fresh flower deliveries to boardrooms and again took away company pagers and cellphones. He also integrated various technology platforms that came with a series of mergers that helped create J.P. Morgan Chase. "During his first years, he hunkered down in the bunker and did nothing except focus on the internal issues," says Tabb. "The company was less outwardly facing and concentrating on fixing its infrastructure. And once they got it fixed, it gave them a great springboard."

Dimon articulated his merger philosophy in a 2001 interview with the Chicago Tribune: "Buying something is like going to war. You can't export your expertise unless you're in good shape yourself."

In hindsight, several major benefits flowed from that internal focus. Dimon had an efficient operation when he needed it most. It was also one that was not built on the steroidal earnings generated by mortgages. Dimon was relatively early to see problems coming and famously recognized how the systemic damage would threaten Wall Street as a whole.

How central is Dimon to J.P. Morgan's continuing acquisition efforts? As key as Dimon is, J.P. Morgan had developed dealmaking skills well before he arrived. The downside: J.P. Morgan Chase is still an evolving culture. One analyst says the difference between Goldman, Sachs & Co.'s culture and J.P. Morgan's is that the former has grown organically and virtually all of upper management has worked there for more than a decade. Executives at J.P. Morgan, however, hail from different companies, via one transaction or the other: Chemical Bank, Chase Manhattan, Manufacturers Hanover, J.P. Morgan & Co., Banc One, now Bear, WaMu and Cazenove.

That does not mean Dimon is any less important. But, happily, extraordinary events like the crisis of 2008 occur rarely. Which means the CEO hopefully won't have to take late-night calls about saving Wall Street anytime soon. - Vipal Monga