FEI's Controllers Conference, held Feb. 13 at the New York Hilton, offered a program going far beyond the nuts and bolts of finance.
One of the keynote speakers, Mark Sirower, corporate development advisor at the Boston Consulting Group, gave some perspectives on the current merger and acquisition slump. The idea that M&A is dead is not true, he said, though activity has clearly fallen off from its peak in 2000, when $477 billion worth of deals were closed. Acquisitions of companies with more than $1 billion in revenues were down 50 percent in 2001, following the biggest merger wave in corporate history.
In a merger wave, Sirower said, companies get swept up in deals for the wrong reasons. "Most deals are dead on arrival," he said, adding, "In fact, most acquisitions that ultimately fail were unintentionally engineered for failure" by not adequately managing such key components as economics, structure, people and process.
Sirower, author of The Synergy Trap, said it's a myth that initial market reactions to a deal don't matter. They do matter, he said -- when a deal gets off to a poor start, statistics show that it under-performs against competitors. Market reaction is critical, he said, pointing to three key tests: 1) Do the companies have a credible story and clear targets to communicate and track? 2) Does the story remove uncertainty and give direction to the organization so employees can deliver? 3) Does the story link post-merger integration issues to the...