Deals from Hell

3

Profiling the Outlying M&A Deals

F. Scott Fitzgerald: “Ernest, the rich are different from you and me.” Ernest Hemingway: “Yes, they have more money.”

Fitzgerald romanticized the rich, suggesting that they had a different sensibility toward life, an appreciation for art and luxury, and special problems that went along with it.“Sensibility, schmensibility,” Hemingway seemed to say. His famous retort implied that the rich are not smarter, harder working, or more creative.They got that way by luck, such as inheritance or a good evening at the casino.The contrasting views have implications for how you think about success and failure. To what extent is either a matter of random occurrence versus attributes that create a predisposition?¹

The research summarized in Chapter 2 gives evidence to suggest relationships among attributes of buyers, targets, and deals and success or failure in M&A. Such research offers an “outside-in” exploration, starting from a population and asking what factors explain the variation in returns within the population. But a Fitzgerald/Hemingway debate also invites an alternative, “inside-out” exploration. Start from groups whose variation is given, such as high and low achievers, and identify the factors that distinguish them from each other. Though it is a road less taken in business research, the inside-out approach has yielded some useful insights and a lot of popular attention.²

EXTREME PERFORMERS

This chapter draws a profile of the extreme performers ...