"The Morning After" offers a few pointers on making mergers work,
but the uneven book promises readers more than it manages to deliver
Samuel Johnson described second marriages as "a triumph of hope
over experience." Given their well-publicized failure rate, the
same might be said of mergers.
In "The Morning After: Making Corporate Mergers Work After the
Deal is Sealed," consultants Stephen J. Wall and Shannon Rye Wall,
a husband and wife team, advise acquirers on how to improve the odds
of success, drawing upon the experience of successful serial acquirers
such as Cicso Systems Inc. The book has two parts, the first on the
merger environment and preclosing activities, the second on the integration
"The Morning After" contains some useful pointers and reminders:
the need for continuing, face-to-face communication and candor, even
if that means admitting that certain decisions have not yet been made,
suggestions on how best to use communications professionals, the value
of analyzing the culture of the seller in detail.
However, the gems occur infrequently. There is too little fresh information,
too much rehash of familiar ideas. This might not be a large failing
if the book were a comprehensive guide that could serve as a sole reference.
But "The Morning After" is not specific enough, staying too
often at the level of theory and generalizations. Even the numerous
case studies and quotations fail to bring the book to life.
There are three underlying causes for these shortcomings. The first
is that the Walls come from a human resources perspective; their current
M&A business evolved out of a high-level HR practice.
Rather than being upfront and saying that the book is almost entirely
about the people-management aspects of merger integration (a critical
and oft-overlooked area), they instead present themselves as being more
knowledgeable about mergers generally than they are. In fact, only the
second half of the book, when the Walls turn to the organizational aspects
of merger integration, is worth reading.
Some of their comments about the deal process in the first half of
the book unwittingly reveal their limited experience. They are not too
crisp about the typical phases of a deal; their advice regarding due
diligence activities presupposes a negotiated transaction. The authors
advise principals not to allow lawyers to negotiate the deal, when tactically,
that can be a winning route. Similarly, they touch on the importance
of understanding the compatibility of the target's information technology
systems but, lacking expertise in this area, they do only a cursory
The second culprit is that the writers do not appear to have decided
who their audience is. While they often offer advice to the CEO, such
as who should be assigned to key roles during the integration process,
some of their other observations about mergers are too basic to be suitable
to a leader of anything other than a very small company. It seems the
Walls, deliberately or not, sought to address both senior management
and HR professionals, and the dual focus does not work. Too many quotes
and examples, for instance, are from the mouths of personnel chiefs,
not a high-credibility source on the subject of mergers in the eyes
of many top managers.
The third problem is that the quality of the authors' advice, even
in the human resources arena, is uneven. For example, they devote a
considerable amount of space discussing the organizational structure
of the merged business, a critical decision that must be made early
in the process. An over-long and overly basic discussion of geographic
versus functional organizations is followed by a simplistic discussion
of mechanisms ("linkages") to compensate for the weaknesses
of the structure chosen. With the book's human resources orientation,
the lack of more detailed and nuanced discussion of how to compensate
for structural choices is surprising.
But the real failing of "The Morning After" is fundamental,
in that it offers too much hope to prospective buyers. The list of truly
successful acquirers is short, and consists of names like Cisco, GE
Capital, ABB, and Sandy Weill, all held in high esteem for their managerial
Yet "The Morning After" states that successful acquirers
handle the personnel aspect of the merger well, and suggests that managing
the integration process is key to success. In actuality, a well-run
integration is a necessary but not sufficient condition for creating
value. Far too many deals, such as the myriad attempts to create "one-stop
shopping" in financial services, founder because the underlying
strategic premise is flawed.
In addition, too many companies, such as AT&T Corp., turn to mergers
to because they are losing ground in the marketplace and hope that obtaining
access to new technology or new markets will rescue them. But if they
cannot manage their existing business well enough to hold their own,
how can they possibly hope to steer their way successfully through the
less familiar, failure-prone acquisition process?
The sad truth is that senior managers and their advisors profit handsomely
from the merger process, irrespective of how the deals fare. As long
as the key decision-makers are largely insulated from the consequences
of failure, even the useful ideas from works like "The Morning
After" are unlikely to be put into practice.