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Deals from Hell

Book Description

A detailed look at the worst M&A deals ever and the lessons learned from them

It's common knowledge that about half of all merger and acquisition (M&A) transactions destroy value for the buyer's shareholders, and about three-quarters fall short of the expectations prevailing at the time the deal is announced. In Deals from Hell, Robert Bruner, one of the foremost thinkers and educators in this field, uncovers the real reasons for these mishaps by taking a closer look at twelve specific instances of M&A failure. Through these real-world examples, he shows readers what went wrong and why, and converts these examples into cautionary tales for executives who need to know how they can successfully navigate their own M&A deals. These page-turning business narratives in M&A failure provide much-needed guidance in this area of business. By addressing the key factors to M&A success and failure, this comprehensive guide illustrates the best ways to analyze, design, and implement M&A deals. Filled with in-depth insights, expert advice, and valuable lessons gleaned from other M&A transactions, Deals from Hell helps readers avoid the common pitfalls associated with this field and presents them with a clear framework for thinking about how to make any M&A transaction a success.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Praise
  4. Dedication
  5. Foreword
  6. Acknowledgements
  7. Chapter 1 - Introduction
    1. OVERVIEW OF THE BOOK
    2. OVERVIEW OF THE FINDINGS
    3. CONCLUSION: ANTICIPATING M&A FAILURE CAN ENHANCE SUCCESS
    4. NOTES
  8. I - THE FOUNDATIONS OF M&A FAILURE
    1. Chapter 2 - Where M&A Pays and Where It Strays: A Survey of Research
      1. CONVENTIONAL WISDOM ON M&A FAILURE: STILL HAZY AFTER ALL THESE YEARS
      2. MEASUREMENT OF M&A PROFITABILITY: BETTER THAN WHAT?
      3. THE BROAD FINDING: M&A PAYS
      4. ALL M&A IS LOCAL
      5. WHERE M&A PAYS AND WHERE IT STRAYS
      6. CONCLUSION: WHAT THE ’HOODS TELL US
      7. NOTES
    2. Chapter 3 - Profiling the Outlying M&A Deals
      1. EXTREME PERFORMERS
      2. NOTES
    3. Chapter 4 - Real Disasters and M&A Failure
      1. M&A FAILURE AS DISASTER
      2. REAL DISASTERS AND THEIR ORIGINS
      3. SOME COMMON ELEMENTS OF REAL DISASTERS
      4. FORESTALLING REAL DISASTERS: SYSTEM REDESIGN AND THE HIGH RELIABILITY ORGANIZATION
      5. CONCLUSIONS
      6. NOTES
  9. II - CASE STUDIES OF M&A FAILURE
    1. Chapter 5 - February 1968: Merger of the Pennsylvania and New York Central Railroads
      1. BEFORE AND AFTER
      2. WORSENING FUNDAMENTALS FOR U.S. RAILROADS AT MID-CENTURY
      3. HISTORY OF THE DEAL
      4. THE MERGER TEAM
      5. THE AFTERMATH
      6. EPILOGUE
      7. COUNTERPOINTS: SUBSEQUENT RAILROAD MERGERS
      8. CONCLUSION
      9. NOTES
    2. Chapter 6 - December 1986: The Leveraged Buyout of Revco Drug Stores
      1. THE DEMISE OF REVCO
      2. COUNTERPOINT: THE LBO OF JACK ECKERD CORPORATION
      3. THE PROBLEM OF CAPITAL ADEQUACY
      4. CONCLUSION: WHAT WENT WRONG
      5. NOTES
    3. Chapter 7 - September 1989: The Acquisition of Columbia Pictures by Sony Corporation
      1. BEAMING ONTO THE BIG SCREEN
      2. MOTIVES FOR THE ACQUISITION
      3. STRIKING THE DEAL
      4. THE GUBER-PETERS YEARS
      5. COUNTERPOINT: UNILEVER’S ACQUISITION OF BESTFOODS
      6. CONCLUSION: WHEN STRETCH TURNS INTO STRAIN
      7. NOTES
    4. Chapter 8 - September 1991: The Acquisition of NCR Corporation by AT&T Corporation
      1. AT&T: COLLECT CALL
      2. ORIGINS OF THE ACQUISITION
      3. NCR: FROM CASH REGISTERS TO COMPUTING
      4. THE TAKEOVER
      5. AFTERMATH
      6. A COMPLEMENTARY DEAL FROM HELL: MERCK AND MEDCO
      7. CONCLUSION
      8. NOTES
    5. Chapter 9 - December 1993: Renault’s Proposed Merger with Volvo
      1. MOTIVES FOR MERGER: RENAULT AND VOLVO
      2. REACTION TO THE MERGER PROPOSAL
      3. COUNTERPOINT: HEWLETT-PACKARD/COMPAQ
      4. RATIONALE FOR THE MERGER OF HP AND COMPAQ
      5. REACTION BY THE MARKET AND WALTER HEWLETT
      6. TERMS OF THE MERGER
      7. THE CAMPAIGN FOR VOTES
      8. THE OUTCOME: HEWLETT-PACKARD/COMPAQ
      9. REFLECTION: THE VALUE OF COMMUNICATION, CREDIBILITY, AND CONTROL
      10. NOTES
    6. Chapter 10 - December 1994: The Acquisition of Snapple by Quaker Oats
      1. SNAPPLE BEVERAGE CORPORATION
      2. MOTIVES FOR QUAKER’S ACQUISITION OF SNAPPLE
      3. HOW THE ACQUISITION PLAYED OUT
      4. COUNTERPOINT: SMUCKER’S ACQUISITION OF JIF AND CRISCO
      5. REFLECTION: THE ROLE OF STRATEGIC REACTION
      6. NOTES
    7. Chapter 11 - May 1999: Mattel’s Acquisition of The Learning Company
      1. MATTEL’S ANNOUNCEMENT OF THE DEAL
      2. COUNTERPOINT: IBM’S ACQUISITION OF LOTUS DEVELOPMENT CORPORATION
      3. CONCLUSION
      4. NOTES
    8. Chapter 12 - January 2001: Merger of AOL and Time Warner
      1. INTRODUCTION
      2. ORIGIN OF THE MERGER
      3. AOL
      4. MOTIVES FOR THE MERGER
      5. AFTERMATH
      6. THE DRIVERS OF FAILURE
      7. COUNTERPOINT: YAHOO! ACQUIRES GEOCITIES AND BROADCAST.COM
      8. THE ACQUISITION OF BROADCAST.COM
      9. AFTERMATH: YAHOO!
      10. CONCLUSION
      11. NOTES
    9. Chapter 13 - December 2001: Dynegy’s Proposed Merger with Enron
      1. THE MERGING FIRMS: ENRON AND DYNEGY
      2. EVENTS LEADING UP TO THE MERGER PROPOSAL
      3. NEGOTIATIONS TO MERGE ENRON AND DYNEGY
      4. THE DYNEGY/ENRON MERGER FALLS APART
      5. COUNTERPOINT: ACQUISITION OF GENERAL CINEMA BY AMC
      6. WHY DYNEGY/ENRON FAILED AND AMC/GENERAL CINEMA SURVIVED
      7. NOTES
    10. Chapter 14 - January 2002: Acquisition Program of Tyco International
      1. TYCO’S SURPRISING NEWS
      2. COUNTERPOINT: THE ACQUISITION PROGRAM AT BERKSHIRE HATHAWAY
      3. CONCLUSION: SOME LESSONS ABOUT MOMENTUM ACQUIRING
      4. NOTES
  10. III - AVOIDING THE DEAL FROM HELL
    1. Chapter 15 - Conclusions and Implications
      1. THE “WHAT” OF M&A FAILURE: PREVALENCE OF FAILURE AND SUCCESS
      2. THE “WHERE” OF M&A FAILURE: NEIGHBORHOODS OF FAILURE AND SUCCESS
      3. THE “WHO” OF M&A FAILURE: PROFILES OF FAILURE AND SUCCESS
      4. THE “HOW” OF M&A FAILURE: THE “PARABLE”
      5. THE “WHY” OF M&A FAILURE: THE PERFECT STORM
      6. FURTHERMORE: A FAILURE-FREE WORLD OF M&A?
    2. Chapter 16 - Memo to the CEO: A Coda on Growth
      1. CULTURE OF GROWTH MOMENTUM
      2. THE KIND OF GROWTH THAT MATTERS
      3. MANAGING IN A HIGGLEDY-PIGGLEDY WORLD
      4. WAKE UP AND SMELL THE SULFUR
  11. References
  12. About the Author
  13. Index