NEW YORK ( TheStreet) -- M&A is back. And that means it might be a good time to sell any acquisitive large-cap companies in your portfolio. There is so much that can, and often does, go wrong with big deals, so it's little wonder that Xerox ( XRX) saw its shares get whacked by more than 14% after it agreed to buy Affiliated Computer Services ( ACS) for $6.4 billion in cash and stock. The other big transaction announced Monday, Abbott Laboratories' ( ABT) $6.6 billion purchase of the pharmaceuticals business of Belgium's Solvay, got a moderate thumbs up from investors, with Abbott's shares rising 2.6%. Of course, it's silly to judge an entire strategy by looking at share performance of the acquirers shortly after deals are announced. Initial reactions tend to relate more to the price paid in a deal (too much or too little) than Wall Street's view of the combination's ultimate success. What is less silly is a paper called "Does M&A Pay?" by Robert F. Bruner, which examines more than 120 scientific studies of the question. Though the paper concludes that M&A does indeed pay, most of that conclusion is based on benefits to target companies. For acquirers, there was a broad dispersion of findings around a zero return, suggesting that executives should approach this activity with caution. A zero return? Hardly good news, though I guess from that perspective if you're a Xerox shareholder you might want to wait for the shares to go back up.
Stock charts are a flawed indicator of a deal's success because acquisitions don't take place in a vacuum. There are too many other factors that influence share price. Still, examples like the superior performance of organic Apple vs. serial acquirer Cisco Systems, which was pointed out recently by WSJ.com's David Weidner is noteworthy. Then there's General Electric ( GE), whose acquiring looked pretty good until 2007, when questions about the industrial giant's heavy debt load sent the stock into a nosedive that wiped out decades of gains. It is also interesting to note that Goldman Sachs ( GS), perennially the leading adviser on M&A, does very little acquiring. Nonetheless, the acquisitions it has done are impressive. Its purchase of J. Aron & Company in 1981 was its first since the 1930s. The deal turned Goldman into a commodities trading powerhouse and brought it its current CEO, Lloyd Blankfein, into the fold. That was just a $100 million deal, however. Larger deals may have their place. For better and worse, all the giants of the banking industry, JPMorgan Chase ( JPM), Wells Fargo ( WFC), Bank of America ( BAC), and Citigroup ( C) all grew through a series of acquisitions. Were these deals good for shareholders? Good for the U.S.? I tend to think they weren't, on the whole, but they may be the inevitable result of modernity. What do you think, readers? Written by Dan Freed in New York.