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For corporate executives, that prospect should bring a feeling of relief. While raiders argue that takeovers have made corporate America more productive and efficient, managers call the threat of attack a nerve-racking and costly distraction that inhibits their ability to focus on long-term growth. Each argument has its merits, but after a decade of relentless takeover bidding, debt is becoming a dirty word and raiders have lost their prestige.
In the 1990s corporations will continue to be bought and sold. But the deals will reflect old-fashioned values, like the strategic compatibility of companies with one another, rather than the profits to be made from doing a deal. "The whole system got out of whack," says Myron Lieberman, a senior partner of the Chicago firm Altheimer & Gray, which has specialized in buyouts for 25 years. "We just threw out considerations of how we were going to make the new companies healthy."
For Roderick Hills, a Drexel director and former chairman of the Securities and Exchange Commission, the deepest threat posed by the investment firm's collapse may be the fervor for regulation it inspires. As Hills told TIME correspondent Richard Behar, "The inevitable result of a significant financial failure is that somebody thinks they can pass a law to stop another one. And it's just as inevitable that the law they pass does more harm than good. I doubt that there are any broad legislative lessons to be drawn from the Drexel experience, and I fear that our Congress will try to draw them."
While Congress has been eager to investigate debacles like Drexel's, it has shown little interest in enacting new laws to curb financial markets, even after the 1987 crash. The real lesson of the fall of the most money-mad firm of a money-mad decade is that in any free market, a heedless competitor can lead virtually the whole industry astray. The pendulum is swinging back now, but the impact of the debt that Drexel's junk bonds loaded on corporate America will not vanish as swiftly as the perpetrator.