Shotgun mergers and acquisitions

Share this:
January 27, 2003 // UPDATED 4:23 pm - April 27, 2007
By: Elana Centor
Elana Centor

The secret dating life of corporate America

It was inevitable. That's why no one was surprised when Stephen M. Case, Chairman of AOL- Time Warner, recently announced he was stepping down. As Don Imus said on his nationally syndicated radio program, "The merger is a wreck."

In the '90s, mergers and acquisitions occurred faster than some guys click through their remotes. Bidding wars and overpriced purchases became business du jour.

Today mergers and acquisitions are more of the distressed nature. According to Matthew Knopf, a mergers and acquisitions attorney at the Minneapolis law firm Dorsey and Whitney, "A lot of companies are in trouble and up for sale, so there are lots of opportunities out there. But, those potential buyers with the capital to do acquisitions today are selective, opportunistic and risk-averse."

In other words, companies are being bought at bargain basement prices. Tyler would agree. Tyler has just spent that past four months as part of an executive team whose mission was: sell the company.

"It was really the corporate version of going through a dating service," explained Tyler, who added, "Actually we had to get married. It was a shotgun merger."

Tyler's company had been an extraordinarily strong performer in its sector during the '90s. Entrepreneurial, young and aggressive, it had a reputation of flaunting its success and refusing to fraternize with the other sector's players.

But as the millennium turned, so did the fortunes of Tyler's company. By the winter of 2002 it became clear: if the company was going to survive at all, it would have to be purchased.

And so began the mating ritual.

"Just like anyone who signs up for a dating service, our company thought we were much more attractive then we actually are," said Tyler. In their fantasy, senior management believed they were akin to Mel Gibson or Anna Kournikova. "The truth is, we were begging for a date, and everyone in the industry apparently understood that except our senior management."

How many dates did Tyler's company get? Just four or five. Not nearly as many as they thought we would.

So what's a corporate date like?

"For starters," said Tyler, "you talk in code. The project itself has a code name, and then each suitor was given a code name. The first date itself takes place over a two- three-day period. A team from our company met with a team from the suitor's company. Our job was to tell the suitor's team what we think they wanted to know."

After the first date?

"It was like the days when I was playing the field. I used to come home from a date, write down which restaurant we went to, and what we talked about. Otherwise, on our next date I might accidentally mix up conversations from other dates. I found it very helpful to use the same approach with our corporate suitors," said Tyler.

"Lucky for your organization that you were a notorious womanizer and anal retentive at the same time," I said. "It truly gives an entirely new meaning to 'transferring life skills.' So is this a great deal?"

"It's a great deal for our customers. It's a great deal for our new owner -- they bought us at 35 percent below our asking price, and it's an unknown whether it's a great deal for employees," said Tyler.

According to mergers and acquisitions attorney Knopf, Tyler's reluctance to predict a rosy future for the newly married organization may be justified, "Some studies have been conducted that say less than 50 percent of all mergers are successful. Whether or not that is the right percentage, it's clear that many mergers don't work out well, either from a return on investment or cultural perspective. From the cultural side, the post-merger reality is rarely exactly the way the buyer said it would be during the dating process."

Tyler is a realist. He's been through an acquisition before. "Best case, they'll compensate me to stay during the transition, and then offer me a very attractive severance package," he said. "I can definitely be bought."

If you have a workplace dilemma or just a good story to tell, please e-mail Elana Centor at ecentor@mn.rr.com. You can be confidential, as can your company.