Please comment: The worst M&A deals of all time
For those who’ve read my blog before, heard me speak at conferences, read my book, etc, you know my feelings on M&A. It invariably doesn’t work, destroys value, and is hugely ego-driven by senior managers looking to build empires and do things that are visionary and transformational.
In a word, M&A sucks. (excuse my bluntness)
What is most appalling about M&A as a practice is that organizations can achieve the out-size returns they aim for by doing things which are more “mundane” such as focusing on optimizing resource allocation and growing organically. This means acquiring new customers, retaining existing customers, selling more to existing customers and innovating. And companies know this but still pursue M&A because of ego and the cadre of bankers and consultants who encourage such foolish behavior and know they’ll earn a boatload of fees smashing the companies together and then pulling them apart a few laters to “unlock value”.
And since it appears we will repeat the debacle that AOL-Time Warner was with the combo of Microsoft & Yahoo, I thought I’d ask folks out there what are the biggest & baddest (read: horribly bad) M&A transactions of all time. (I know Microsoft & Yahoo is far from final but it appears Mr Softee is drunk enough to believe that getting Yahoo is key to their success online and so I expect the price will go up). Here is the list of 5 colossally bad deals to get things started and get your juices flowing:
- Mercedes Benz & Chrysler - Let’s put a sweet German car maker together with a crappy, outdated US car manufacturer and see what happens. The results? Not ideal.
- Sprint & Nextel - When they merged, the combined entity was worth about $70B and now they’re worth a combined ~$25B. If success is determined by shedding value, this deal was wildly successful. Bravo.
- Sears & Kmart - Eddie Lampert was supposed to be the next Warren Buffett. I wonder how many people have been compared to the Oracle. What happened to that? Again, Sears-Kmart is predicated on the idea that you mate 2 dogs and somehow get a pony. Sorry.
- AOL & Time Warner - Do I need to even say anything about how bad this deal was? Mix dot com insanity with crappy dial-up biz model and dying print business and what do you get? AOL-Time Warner of course.
So that should get the ball rolling. Thoughts, wisdom, other deals to add?
Tags: aol-time warner, chrysler daimler, kmart, M&A, sears
