One of the problems with books of historical case studies is a lack of general principles, and a feeling that the authors are looking in the back of the book for the answers. The post-mortems don't really offer any guidance for the pre-mortem. A book like Thinking In Time, popular with the public administration crowd, seems too clever by half, proving the importance of judgment without helping much to develop it. It compares the handling of two different potential epidemics, but which one applies to the Bird Flu?
This is one reason that case studies are popular in business schools, but also seem to fall short of the goal. Since you're obviously supposed to evaluate the case in light of the reading, after three years they seem more like a game than like real life.
An exception to this rule is Robert F. Bruner's Deals From Hell, an examination of why M&A deals fail.
Robert F. Bruner, a professor specializing in the subject at Virginia's Darden Graduate School of Business, presents the material systematically, if somewhat dryly. Bruner believes that M&A activity is usually successful, as opposed to the oft-made claim that 50%-80% of M&As fail. He argues in the introduction that the deals most likely to garner attention are also those most likely to fail: stock deals, for public companies, in hot markets, where the buyer is expecting too much from the deal. In fact, most M&A activity takes place among privately-held firms, where success is more likely but hidden.
The book lays out what Bruner believes to be the six most important factors in deal failure, and then proceeds to apply them to all ten cases. They are: complexity (both in deal structure and in operations), tight coupling (allowing trouble to spread through the company), flawed assumptions of business-as-usual, conceptual bias in management, poor choices, and a poor cultural fit.
The net effect is that of a buyer biting off more than it can chew. It finds itself dealing with changing business conditions at a time when its energies are absorbed by personnel issues, and its ongoing operations are disrupted. If it puts off integrating operations, the combined companies may not see the returns on investment they had expected.
There are ways to avoid these monsters. Creativity in financing can create incentives for management teams to work together. Not getting swept up in a hot market can avoid the massive overpayments (and up-front stresses on the buyer's finances) evident in almost all of these deals. The buyer should almost never look at the seller as its savior - that leads to almost all of the six factors.
Article comments
1 - Krasimir [FilmDailies.com]
Most researchers agree that a huge number of the mergers fail. I'm falmiliar with Jack Welch's perspective but it's interesting to see another one as well.