Merger and Acquiescence

Companies of all shapes and sizes are looking for ways to save, stabilize and grow their business.

In many cases, they consider merging with competitors or related-service companies as a way of gaining market share or cutting costs.

Vertical or horizontal integration? They're not fussy. Business owners post-rationalize either as a way to convince themselves the deal is smart and will lead to a new world order.

AOl-Time Warner stands as a beacon of the humility that follows hubris when it comes to most M&A deals.

A recent analysis of the biggest deals of the last decade illustrates how often the owners get it wrong. And the cost of doing so. 

Since January 1, 2000 there have been 316,657 M&A deals done around the world.

Their total value - $25.2 trillion. Put another way, that’s half what the world creates in a good year.

And the returns?  On the simplest level, the bigger the company the greater the likelihood the deal will cost the shareholders money. The largest transactions destroyed more capital than they created post merger.

Intuitively it makes sense that smaller companies are more likely to do more valuable deals. It’s easier to see the pros and cons and for all the principals to be involved.

But the majority of M&A deals still fail for one simple reason.

Social issues.

These come in many forms. Culture. Beliefs. Embedded influences. Local norms.

Subtle. Nuanced. Uncomfortable to address.

Instead negotiations focus on the tangible. Ownership percentages, board membership, management control and compensation.

But if you don’t take cultural differences into account when you examine the pros and cons of a merger or acquisition you ignore the thing most likely to undermine its success.

Your staff believing that this is their company. 

Energy that is always the difference between the average business and the great.

Merging two cultures into one can be done. We did it to enormous and long-lasting effect at the Whitehouse.

But you have to take the best of both to make it work.

Which takes time, focus, commitment and a long-term vision that the costs of the effort are worth it. Patience is helpful as well. And a bucket or two of being willing to see the other side. A trait which requires you have enough confidence in your own view to set it aside from time to time.

Put all that together as the foundations of a new business model and you might change the world.

Otherwise, you're just wasting time. Yours and everyone else's'.


I used to work for Ogilvy & Mather. An advertising agency.

Actually when I worked for them they were the advertising agency. They had just been voted agency of the year. Advertising icons occupied the seats of power. Their rising stars rose. And became stars. And about twice a year you’d run into David Ogilvy himself in the hallways. It was something.

Ogilvy & Mather taught me how to write. They taught me about Trumpeter Swans and Gentlemen With Brains and the Ogilvy Award, given to the person who most embodied the principles they espoused: honesty; humanity, and an abhorrence of office politics.

They knew what they stood for. And they spent time and serious money training you to become great. These days, the first is rare. The second unheard of.

They did brilliant work. And they made sure we had a hell of lot of fun doing it. On my first Christmas they walked the entire office, over 1000 people, through Manhattan wearing our newly presented red and white Ogilvy scarves to Broadway where they had rented out A Chorus Line. It had just won the Tony. I may have been more proud of being part of something at some other point in my life. But it’s not obvious to me when.

They let me move through four different departments before I found my calling as a television producer because they saw something in me before I did. I frequently found myself comparing that to the Chicago agency behemoth which kicked me out of my interview ninety seconds after they heard my GPA. Ninety seconds. I wouldn’t have minded but they’d just offered me a job. Apparently my GPA was a better judge of my talent than my interviewer.

I was reminded last week of my Ogilvy experience by an article written by Ken Roman. Ken, who became Chairman and CEO of Ogilvy, describes the culture of the company from the perspective of someone who helped to refine and implement the Purpose David Ogilvy’s had for his company.

A Purpose. It was nothing less than that. And it guided the company on a daily basis for a long time. And thousands of us were the beneficiaries. So was his business. And his clients.

I believe profoundly in the culture of a company. Not in some esoteric, instinctive definition. But in a specific, confident and practiced definition. One to live by. And be guided by. In good times and bad.

Without one you’re just here for the money. And so are your employees.

Without one you’re on borrowed time. With your customers and your staff.

With one you can change the world.