DEALS OF THE YEAR Lenders turned leery, and debt became a dirty word in 1990. Commonsense transactions backed by cash gave the near-moribund market its only oomph.
By Jaclyn Fierman REPORTER ASSOCIATE Nicole Quow

(FORTUNE Magazine) – DEALMAKERS will remember 1990 as the year they made it home in time to kiss their children good night. But after toting up how much those kisses represent in lost business, they may long for the bear hugs and bust-ups of yore. Oh, for the days when merger jargon sizzled like The Bonfire of the Vanities and two-ton companies were put into play like Ping-Pong balls. There was almost none of that last year. As attorney Martin Lipton, of Wachtell Lipton Rosen & Katz, summed up, ''The junk-bond market disappeared, bank financing disappeared, and the corporate raider disappeared.'' Call it the year the deal didn't get done. According to IDD Information Services in New York City, merger volume was way off in 1990. So were prices. The 900 or so transactions involving at least one U.S. player -- roughly a third fewer than in 1989 -- totaled less than $120 billion, down more than 50% from the previous year. FORTUNE's annual list of the year's 50 biggest deals brings the larger picture into focus. Their combined value is just under $72 billion, only half last year's record $144 billion. Exclude the gargantuan $25 billion RJR buyout from 1989's tally, and 1990 was still a washout. The tale behind the deflated numbers? A long overdue case of cold feet. Would-be acquirers were cowed by incessant talk of recession, the crisis in Kuwait, the comeuppance of Michael Milken, and the new anti-greed zeitgeist. The acquisitions, restructurings, public offerings, and stock buybacks that did take place were, on the whole, down-to-earth deals. Says William H. Strong, co-head of mergers and acquisitions at Salomon Brothers: ''The strategic buyer, especially the company with cash in its coffers, is once again king.'' Common sense packaged itself in many forms. Companies galore peered across geographical boundaries for obvious merger mates. To wit, the year's last and largest deal: Japan's Matsushita paid over $6 billion for MCA, the U.S. entertainment giant. In other strokes of sobriety, LBOs put themselves on the block and governments around the world began to auction off their cash- and technology-starved industries. Also abuzz were U.S. telecommunications companies, eager to consolidate resources, customers, and know-how. Among them: McCaw Cellular Communications acquired a majority interest in its rival, LIN Broadcasting, for $3.8 billion. ^ Equally illustrative of the most conspicuous trends was the year's second- largest transaction, Philip Morris's $4.2 billion purchase of Switzerland's Jacobs Suchard AG. The acquisition was a wise strategic move for the cash-rich food company, which is looking to break its dependence on nicotine profits. Buying one of the world's largest coffee and candy outfits enables Philip Morris to butt heads with the European food giants, Nestle and Unilever. Prudence has replaced piggishness in the lexicon of the new decade. For one thing, it's tough to borrow money. Says Jack Levy, co-head of mergers and acquisitions at Merrill Lynch: ''There is a new skepticism among commercial bankers when they review deals. Two years ago they would ask, 'How can I get in on this transaction?' Today the first question they ask is how they might get burned.'' Discount shopping was de rigueur. European and Japanese acquirers, armed with their brawny currencies, concluded 15 of the 50 deals on the list. For example, Switzerland's Roche Holding, a health-care concern, bought 60% of Genentech for $2.1 billion, and France's Cie de Saint-Gobain bought Norton, a building materials company, for $1.9 billion. Even without benefit of strong francs or yen, there were bargains. Forstmann Little, one of the few firms still active in the leveraged-buyout game last year, bought General Instrument for $1.5 billion, cheap compared with what it might have paid just a few years ago. Debt being the newest four-letter word, even LBOs were less leveraged last year. The equity portion of these deals expanded from the once typical 10% sliver to as much as 40%, according to Corporate Finance magazine. No surprise there, given that banks are pinching pennies and the junk bond market has been sent upriver along with its best-known player. With the M&A business off by roughly half in dollar volume, so were fees -- and bonuses. Wall Street's population has shrunk by 48,000 so far, and a surprising number of investment bankers are among the unemployed. Insult of all insults: Michael Ovitz, Tinseltown's premier movie agent, matched Matsushita and MCA while Wall Streeters drooled. But the acquisition had enough loose ends to tie up -- and incidental fees to go around -- that 1990 had a happy Hollywood ending after all for many dealmakers.

CHART: NOT AVAILABLE CREDIT: THIS LIST WAS COMPILED BY REPORTER ASSOCIATE KATHLEEN CARROLL SMYTH. CAPTION: DEALS OF THE YEAR