Mobile Edition
Print
Get the Mag
Weekly UpdatesI'll never forget the story told by a big-name director who was keynoting an M&A conference back in the 1980s, when the merger boom was running rampant. That director will go unnamed, as you'll soon see why (and also because the session was off the record). He was an oil patch fellow, but at the time was serving on the board of an apparel company that was being attacked by a raider. His job at the conference was to walk the audience through a case study of how the board handled this hostile assault.
[ILLUSTRATION OMITTED]
He crunched the numbers in a reasonable fashion, and traced the steps that he and his fellow directors took in responding to this unwelcome would-be acquirer. But, in a moment of refreshing candor, he admitted that the primal reaction driving his behavior during the deal was outrage.
"They're trying to take away my suits!" he howled--to which we in the audience howled in laughter in return.
He wasn't talking about lawsuits, either. One of the bennies of being on this board was that the directors were suited up with several complimentary outfits each year. And that was just not right for any raider to mess with. So, if the directors had their druthers, all they wished for was for the hostile party to just go away and leave them alone to enjoy their tailor-mades.
In the end, it was the end of the suits. The deal got done, the shareholders were well rewarded ... but, oh, what we heard in our keynoter's voice was the regret that lingered for the lost sartorial splendors.
There are many sides to an M&A transaction--financial, legal, strategic, tactical. And, as the above story testifies, there is a human element to every deal. You will find solid briefings on these dimensions of dealmaking in the following pages of this Boardroom Briefing, our fourth annual spotlight on M&A playbooks by leading practitioners.
I'm always taken with tales of how that human element compels--sometimes propels, sometimes repels--a transaction. My all-time favorite story came from an interview I did for Directors & Boards in 1984 with William Fishman, who over the course of 40 years as a serial acquirer had built up a multibillion-dollar diversified services company now known as Aramark Corp. (He died in 1991.) In no uncertain terms, he told me this: "The most important facet of any transaction is to establish a personal relationship between the seller and the buyer--not as companies, but as individuals. Until the seller has faith and believes the buyer, the transaction is a very cold and probably unsuccessful one." And then he proceeded to tell me this story: "I well remember one transaction where I had worked the better part of three years on acquiring a company in Chicago that we desired very much, and I wasn't getting anywhere. The company was a competitor, so there was a natural amount of skepticism and hostility between us.
"But one day I just happened to take this fellow, whose business we were trying to acquire, to a restaurant in the Drake Hotel in Chicago. The waiter came up--I knew the waiter, 1 had been there often--and my guest looked at the waiter and, in the middle of his sentence, broke out in tears, weeping. I had not the slightest idea what he was weeping about. Well, it turned out that the waiter had waited on my guest's father back on the West Side of Chicago, and had always taken good care of his father--who had just recently died.
"This fellow had a tough, hard shell, but he wasn't hard inside. When 1 understood what he was crying about, that's when he and I began to relate. Those are the kinds of things that get into an acquisition that finance people don't always understand."
End of story. But the right place to start this Boardroom Briefing. Let the advisories that follow guide your thinking and your tactics ... and always keep that human element at top of mind.
James Kristie is editor and associate publisher of Directors & Boards, and can be reached at jkristie@directorsandboards.com.
FEED