University of Minnesota - UMN Executive Leadership Insights
Mergers
Book

Mergers

Leadership, Performance and Corporate Health

David Fubini, Colin Price and Maurizio Zollo
Palgrave Macmillan, 2006
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Editorial Rating

7

Qualities

  • Applicable

Recommendation

Authors David Fubini, Colin Price and Maurizio Zollo base their short book on a uniquely comprehensive investigation: survey responses from 30 senior managers on the front lines of mergers around the world. The authors focus on crafting “healthy” mergers, which goes beyond the obvious process of merely merging two companies to meet future financial goals. Healthy mergers happen when those in charge maximize both companies’ synergies. Most executives say this is their goal, but their claims are often just rhetoric, since most mergers fail to meet long-term financial and organizational goals. This book nicely explains how senior managers and CEOs can rectify this situation, and avoid making expensive mistakes, but it bogs down in consultant-speak, repeated examples, managerial double-talk and an overly long section on corporate culture. Despite these drawbacks, getAbstract considers this well-informed description of pitfalls in the world of mergers very helpful to those who must survive there.

Summary

The Integration Challenge

Successful mergers require successful integration. CEOs and senior managers who are involved in mergers must become more skilled at seeing the real synergies between companies. First, financial markets are better at recognizing vague promises than realities. Second, successful mergers rely on identifying and capitalizing on synergies. But, in reality, not all synergies are beneficial. Some are “unhealthy” and can harm the acquiring company in the short and long term. Unhealthy mergers have serious financial consequences, while successful mergers generate added value and enhance long-range performance. In theory, senior managers’ energetic leadership during a merger produces a new company that is greater than the sum of its parts.

The reality is very different. According to researchers and academics, average mergers and acquisitions deliver only mediocre performance. This is mostly because of unrealistic financial projections, poor management of potential synergies, bad accountability, inattentive senior management and inadequate resources. Weak senior managers who underestimate how difficult it is to create new value from the merged companies...

About the Authors

David Fubini, in Boston, and Colin Price, in London, are directors of McKinsey & Company. Price is also a McKinsey “Global Knowledge Leader.” Maurizio Zollo is the Shell Fellow in Business and the Environment, and an Associate Professor of Strategy at INSEAD in France.

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