The laugh's on mergers

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The Independent Online
One of the easiest ways to raise a laugh at a management conference is to talk about mergers - and in particular how often they fail to live up to expectations.

The reason is simple. The evidence of deals that promised so much and delivered so little is all around us. But even allowing for the soft target in their sights, Mark Feldman and Michael Spratt are entertaining.

As you might expect from a pair that produced a book with the title Five Frogs On a Log (John Wiley, pounds 24.95), they have a seemingly bottomless store of aphorisms. All are invoked to cast doubt, and not a little hilarity, on that wonderful activity known as mergers and acquisitions.

Many of the barbs are well aimed. Early on in this short and highly readable book the authors describe "the seven deadly sins in implementing transitions in mergers, acquisitions, and gut-wrenching change".

The first is "obsessive list making". This is a result of over-preparing for the deal and involves a master list of tasks and details that "becomes a mind-numbing, morale-destroying, ego-deflating, knee-buckling litany".

The second is "content-free communications" in which deal announcements consist "primarily of hype and promotion and always produce more questions than answers". And so on until the seventh - "rewarding the wrong behaviours" - a corporate trait that, of course, is not limited to mergers and acquisitions.

You get the idea. Put this way, it would appear that these deals do not fail because they are fundamentally flawed, or because they are the wrong thing at that time for the organisations in question.

This is understandable. Both Mr Feldman and Mr Spratt are management consultants and, although they take the odd swipe at the investment bankers who gain most from this sort of corporate activity, there is a fair bit in it for their profession too.

Anyway, their thesis is that the real reason why deals fail is that the executives put in charge of them are wanting in exactly this respect: they fail to take charge.

Glaxo Wellcome is one of the few results of a merger that is widely reckoned to have been a success, so it is fitting that they quote approvingly from Jeremy Strachan, the company's legal and corporate affairs director, who has said: "We moved rapidly even at the risk of making some mistakes. And we don't seem to have made any more mistakes than if we had taken twice as long." It makes a powerful case for speed and decision.

In fact, so convinced are the pair of the importance of these attributes, not just for deals but all kinds of corporate change, that they and their colleagues at PricewaterhouseCoopers have created a service line, which they have trademarked The Accelerated Transition.

The problem with this, though, is that it leads them perilously close to the territory that they attack. "This is not the time to call up the latest management fad," they insist, before describing what sounds a lot like, if not a fad, then certainly a technique.