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Deals from Hell by Arthur Levitt Jr., Robert F. Bruner

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4
Real Disasters and M&A Failure

M&A FAILURE AS DISASTER

In 2001, the business world seemed to be coming unglued.The collapse of the Internet bubble, the onset of recession, the terrorist attacks on the Twin Towers, and the distress of businesses were capped by the death-spiral of Enron Corporation—a business Chernobyl. Real disasters entail the destruction of physical assets, death, and injury to people. When businesses melt down, they destroy monetary value, social capital, reputation, market position, and fictional persons (such as corporations in the eyes of the law).
The parallels between real disasters and merger failures can yield important insights that augment our understanding of the kinds offered in Chapters 2 and 3.1 To my knowledge this book is the first exploration of these parallels. Such explorations can synthesize a large body of research and wide field of evidence. The investigations and extensive documentation of facts surrounding real disasters tells us a great deal about them (though given the toll in human life, what we know will never feel like enough). Studies of real disasters arise from fields as disparate as engineering (why buildings and aircraft fall down), economics (how costly is safety?), cognitive psychology (why do humans err?), military history (why do armies lose battles?), epidemiology (how does disease spread?), sociology (why do structures of social control fail to reduce risk?), politics (can public policy prevent accidents?), and operations ...

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