Of memes and mergers

Let’s look at the traditional explanations, both rational and perverse, for why mergers happen... and why they fail.

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A memetic explanation for why mergers happen

I think that there are two main memetic explanations for mergers, which go part-way to explaining this recurring form of economic madness.  The first are the memes that the CEO is running and the second is the underlying memes of the corporation.

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Tread softly, for you tread on my memes

We all invest a lot of emotional effort in our work – we have to, or we won’t be able to survive the tedium and disappointment that every working day brings. Let's take a look at how that emotional effort can undermine the merger process.

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Why mergers fail

Let me start by saying that I really don’t want to overplay the contribution that meme clashes play in merger failure. Probably the largest cause of failure to deliver value from a merger is that it was a stupid idea in the first place, either because the strategic fit was wrong, or because the expected sources of value did not exist.  But I am certain that meme clashes contribute to merger failure, a topic we explore here.

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Case study: merger failures

There are dozens, if not hundreds, of examples I could use of mergers that have failed.  I've chosen two: the catastrophic merger between AOL and Time Warner, and the rash of acquisitions by software houses of management consultancies.

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