A look back

OK, we admit it. It's hard not to glance at last year's Deals of the Year package and not cringe. For there among troubled or broken transactions that made the list because they foreshadowed the tumultuous months to come -- think JC Flowers & Co. LLC walking from SLM Corp. or United Rentals Inc. suing Cerberus Capital Management LP -- were audacious, headline-grabbing deals that looked pretty swell then, but which resemble real clunkers now.

Chief among these is Royal Bank of Scotland Group plc's $100 billion acquisition of Dutch bank ABN Amro Bank NV, the biggest financial services deal ever. RBS, of course, had to be bailed out by the British government last fall to the tune of £20 billion ($29 billion).

But there's also Sam Zell's $8.2 billion privatization of Tribune Co., which filed for bankruptcy less than a year after the deal's completion. And let's not forget Cerberus' $7.4 billion takeover of Chrysler LLC. By December, the U.S. automaker looked like it was careening toward insolvency before securing $4 billion in government loans.

So what does this say about our deal-picking prowess? Should we hang our heads in journalistic shame for shining a light on transactions that, rightly or wrongly, are now universally considered to be dogs?

Well, not exactly. Deals of the Year was never meant to be an exercise in conferring "best of" status on M&A transactions; we're simply not prescient enough to determine a deal's ultimate performance, worthiness or destiny. Instead, we try to pick deals that are significant, due to either the complexity or creativity of their structures, their ability to change the industrial or regulatory landscape, or because they signal a turning point of some sort.

Royal Bank of Scotland's gargantuan takeover of ABN, for instance, made the list last year not simply because of its size, but because of its manifold complexities. For one thing, it was stunningly international, with RBS teaming up with Spain's Banco Santander SA and Dutch-Belgian lender Fortis Bank SA/NV to buy the Dutch bank, topping a friendly offer from Barclays plc. It also had lots of fascinating twists and turns. In an effort to save the Barclays deal, ABN sold its U.S. unit, Chicago-based LaSalle Bank Corp., to Bank of America Corp. for $21 billion.

That sale featured a U.S.-style merger agreement that included a go-shop clause -- an unusual and perhaps unprecedented move in the sale of a division. RBS challenged the LaSalle sale and lost.

But it went on to win a resistant ABN in October 2007, with a largely cash offer that trumped the Barclays bid -- even as European stock markets tumbled and credit tightened.

The timing of the deal proved disastrous, of course; it was struck just before the subprime crisis really hit home. But if it had been done a year or two earlier, would the ABN takeover look as bad as it does today? Is it suffering from poor execution, poor dealcraft or just poor timing?

Once again, we're reminded of just how difficult it is to determine if deals are "good" or "bad." So as you read this year's installment of Deals of the Year, remember, noteworthy doesn't necessarily mean best.