Author: Carlos Keener

Over-preparation, which usually manifests itself in extremely detailed, all-encompassing, grand plans, is a hazard that can arise particularly where integration leaders have previously burnt their fingers from  ‘being taken by surprise’ by unexpected events. Understandably, they attribute this to having been previously under-prepared, and instead...

There’s an interesting set of comments in this week’s The Economist  in an article called “Goodwill Hunting” which suggests that corporate ‘write-downs of goodwill’ mask the admission of past M&A failure. But who reads or understands the intricacies of such obscure financial numbers? A good example is HP’s ‘cathartic’ write-down of some $18bn of goodwill, effectively rolling in the Autonomy debacle as well as other past failures, e.g. Compaq. The article goes on to suggest that it generally takes about 5 years for such a failure to de-toxify. I guess at that point, directors can declare mea culpa with little backlash on the basis that they were probably not at the helm when the original acquisition took place (Autonomy may be an exception but we wait and see).

I’ve just left the 5th Merger Integration forum held by Thought Leader Global in Amsterdam.  Over the past 10 years or so I've been to many such conferences - both by TLG and others - and although the economic downturn has seen fewer conferences run, I was interested to note some differences emerging from what I'd have experienced just a couple of years ago.

Congratulations to Glencore on finally completing their long-running merger with Xstrata; we wish Ivan Glasenberg and his team the best of luck. It was especially encouraging to see his comments as reported in the Wall Street Journal earlier today (3 May) recognising that deals only add value post-close, so celebrations are by no means in order yet – the hard work is only just beginning. 

Everyone knows that lawyers – whether in-house, external or a combination of both – are key to successfully conducting M&A. Less well recognised is the positive role they can have in helping identify, understand and tackle integration and other post-close issues. This applies as much to in-house legal teams as it does to the supporting law firms, both of whom tend in my view to stay too much within their comfort zone. The value of lawyers across the deal spectrum can come not so much from what they do, as what they see along the way. Consider the following typical areas of legal M&A support pre-close:

From the moment a deal is announced ‘building credibility and trust’ with stakeholders is a key objective for the communications effort.   A key factor in building credibility is being consistent in the messages you give - ‘boringly consistent’ as a former senior exec client proudly once called it.  He understood the power of the well honed, repeated and repeatable message and as a result the organisation ‘got’ the change programme he was leading.

Today saw the announcement of a major acquisition in the scientific equipment space as Life Technologies is sold for $13.6B to Thermo Fisher Scientific. Encouraging news to see larger deals taking place in the high-tech sector; but makes me wonder: Are we going to return to the ‘good old bad old days’ of high-profile mega-deals followed by integration problems, management mud-slinging (see HP Autonomy) and ultimate value destruction; or is there a chance that we might be seeing some wiser, clearer thinking?

Last week two blistering reports came out on the subject of supposed wrong doing, incompetence and poor leadership in banks. First was Anthony Salz’s report on Barclays culture prompted by the bank’s attempt to rig Libor and yesterday’s Parliamentary Commission on Banking Standards  pinpointing three senior executives once at the top of HBOS with indications that these people might never be able to work in financial services again. In addition, RBS investors launched a class action lawsuit against the bank and former directors including the ex CEO Fred Goodwin. They are looking for £4bn in compensation. Not surprisingly all these projects were managed by those outside the organisations which does not say much for the degree of internal self discipline and self analysis which their existing culture engenders.