Why Directors Should Embrace a Merger Mindset

• DOI: http://doi.org/10.1002/bl.30130
• Author: Linda Henman
• Published date: 01 March 2019
• Date: 01 March 2019

MAR.–APR.2019 5

Why Directors Should

Embrace a Merger Mindset

Dr. Linda Henman

Dr. Linda Henman is the author of six books, including Tough Calls: How to Move

Beyond Indecision and Good Intentions. She has more than 35 years of experience

working with executives and boards in Fortune 500 companies and small

businesses to help them exceed their strategic objectives by maximizing talent. In

this article, Dr. Henman explores the key psychological forces that come into play

when board members seek to shepherd their organizations through mergers and

acquisitions.

In today’s fast-paced, volatile, global

economy, serving on a corporate

board just isn’t what it used to be.

Arguably, effective corporate gov-

ernance requires what it has always

demanded: advanced skills in problem-

solving and decision-making, crisis

management, leadership development,

and financial oversight. But now busi-

nesses need more as the role of direc-

tors has become more complicated,

and companies are considering more

mergers and acquisitions (M&As), as

these businesses did in 2018:

•Amazon picked up Whole Foods.

•Arby’s nabbed Buffalo Wild Wings.

•Burger King bought Popeyes.

•Campbell’s acquired Snyder’s.

•Dr Pepper Snapple merged with

Keurig Green Mountain.

•General Mills purchased Blue

Buffalo.

•Hershey picked up SkinnyPop.

•Cigna secured Express Scripts.

•CVS is buying Aetna.

•AOL and Yahoo became Oath.

•Disney is attempting to buy part

of 21st Century Fox.

•Albertsons agreed to buy Rite Aid.

•Coach acquired Kate Spade.

•Michael Kors purchased Jimmy

Choo.

Now more than ever, directors rec-

ognize that what got them here won’t

get them to the next level of suc-

cess. The companies they serve may

not stay the same, and certainly the

companies that compete with them

won’t. Active, compliant boards and

executives no longer offer organiza-

tions enough. To remain competitive,

savvy directors realize they also need

to understand the high-stakes world

of mergers, acquisitions, and divesti-

ture. In short, they need to develop a

Merger Mindset.

What is a Merger Mindset?

I have found that five psychological

forces influence directors involved in

mergers, acquisitions, and divestitures.

Beliefs

When facing any kind of high-stakes

situation, we base our decisions on

what we know to be true—what we

believe. Sometimes, however, we

believe something that isn’t true. Both

intellectual and emotional, beliefs

influence our behavior when facts and

reason alone don’t.

“What you are speaks so loudly I

can’t hear what you say,” noted Ralph

Waldo Emerson, capturing the essence

of what separates espoused beliefs

(what we say we believe) from oper-

ating beliefs (the way we do things

around here). But Emerson’s observa-

tion omitted other factors that influ-

ence beliefs, such as habits, mental

models, and traditions—or the way

we’ve always done things around here.

Then, we begin to talk about corpo-

rate culture.

We use the word culture arbi-

trarily, citing it to explain why things

don’t change, won’t change, or can’t

change. We talk about a country’s cul-

ture, school cultures, business cultures,

culture clashes, and emerging cultures.

A powerful force, culture anchors

strategy and creates the environment

where the best people can do their

best work. It’s that subtle yet power-

ful driver that leaders strive—often

futilely—to influence. Directors who

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