1. Some thoughts on how broken M&A is, and how to fix it

2. M&A is Growing in all Industries… (Graph source: MergerMarket)

3. M&A incompetency may be decreasing modestly…

4. Yet top acquirers still regularly make $1B mistakes… (some recent examples)
($700,000,000)($8,000,000,000) ($700,000,000)
($100,000,000) ($6,200,000,000)

5. “…beliefs in one’s superiority have
significant consequences… misguided
acquisitions have been explained by a
“hubris hypothesis”: the executives of
the acquiring firm are simply less
competent than they think they are.”
Nobel laureate Professor Daniel Kahneman:
Thinking, Fast and Slow, 2011 (p.258)
M&A failure is rooted in misaligned interest and hubris…
Correlation between company
size and executive pay
incentivizes CEOs to expand
their companies regardless of
financial consequences.
Stanford GSB professor Jeffrey Pfeffer:
Power, 2010 (pp.93-4)

6. The solution is in turning CEOs from ‘all knowing’ to Social Architects…
McKinsey Quarterly 2012:
“Senior executives who launch [social strategy]
initiatives are essentially… embracing the
underlying principles—transparency, radical
inclusion, egalitarianism, and peer review—of
the Web-based social technologies that make
it possible to open up direction setting.
Taking these principles to their logical
conclusion suggests a shift in the strategic-
leadership role of the CEO and other
members of the C-suite: from “all-knowing
decision makers,” who are expected to know
everything and tell others what to do, to
“social architects,” who spend a lot of time
thinking about how to create the processes
and incentives that unearth the best thinking
and unleash the full potential of all who work
at a company.”

7. Summary
• M&A is complex, many parties
involved
• Parties’ interests aren’t aligned
• Most M&A fails
• Failure built on behavioral issues
• The way to fix M&A is also behavioral
• Social M&A is going from strategy and
deal flow to implementation
• We at Merjerz are leading the
way, join us at www.merjerz.com