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PotashCorp mill general superintendent Trevor Berg holds a handful of chicklet potash at a potash holding centre at the Cory mine facilities near Saskatoon, August 19, 2010.

David Stobbe/Reuters

Blessed with hot markets and easy access to cash or credit lines, chief executive officers are hunting for major deals again, ready to pull the trigger on acquisitions worth tens of billions of dollars.

In just two weeks we've seen a $40-billion (U.S.) offer from AT&T Inc. for DirecTV LLC, as well as a $48-billion bid from Valeant Pharmaceuticals for Allergan Inc. What's next: another run at Potash Corp. of Saskatchewan Inc.? If so, let's hope BHP Billiton Ltd. really thinks it through. Because a CEO's true value doesn't stem from striking deals that look sexy. It's rooted in realizing when to say "no."

The miners know all about this. Their CEOs went nuts during the last commodity super-cycle, falling over themselves to secure deals. The fallout: tens of billions worth of writeoffs and a complete changing of the guard. Scores of CEOs were exiled from their companies.

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Private equity firms learned their lessons, too. Leveraged buyouts are incredibly tough to pull off because the necessary debt burdens can cripple the target companies. Look no further than Tervita Corp. and Energy Future Holdings Corp. for proof.

Yet here we are again amid another round of mega deals. The problem, you see, is that everyone gets antsy. "Dominoes start to fall," Vito Sperduto, the head of U.S. mergers and acquisitions for Royal Bank of Canada's investment arm told the Globe and Mail's Joanna Slater last week. "Companies do not want to be left out of the mergers-and-acquisitions wave once transactions start to happen in their space."

CEOs, it seems, are just like little kids who are scared of being picked last by team captains in gym class.

Their minds also play tricks on them. Our brains are conditioned to convince us that this time really is different. But it never is. Some deals will work out, others will fail famously. CEOs will be fired.

The hard part is sitting back and waiting for the failures to unfold, because it can take years. RBC took a lot of heat leading up to the financial crisis because the bank wouldn't aggressively bulk up abroad. It took a near-collapse of financial markets to prove the lender's executive team was just being prudent.

Weathering that kind of criticism, sometimes from your own shareholders, takes guts. But that's why we pay CEOs big bucks. Let's hope at least some of them remember that.

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