It’s SuperBowl Weekend (woohoooo!) … that magical time of the year when all of life can be distilled down to sports maxims and 100-yard metaphors.
The Merger Verger’s favorite? This one:
Defense Wins Championships
Now, we get the universality of many sports maxims but as business guidance that one is a disaster, particularly in the context of M&A.
As every successful acquirer knows, good deals begin with good strategies. A good strategy gives rise to solid value drivers, which enable sharper focus and clearer future goals. It paves the way for asking more action-empowering questions in due diligence, which results in more effective solutions. And all that tends to lead to a more successful outcome for your acquisitions.
That part of M&A is as basic as it gets.
Defense is Not a Strategy
Defense is an awareness, a tool for protecting your flanks (and your backside). It cannot and will not ever power you forward.
If the reason to do a deal is primarily defensive – to react impulsively to some competitor’s move or prevent The Other Guy from buying some company – what, pray tell, do you do with the target once you’ve got it? On what basis do you make future decisions when in the mere act of closing you accomplish the only strategic objective that your action permits: allowing you to say, “We won?”
Defense may shape the outcome of Sunday’s game. But its value in doing deals is basically nil.
If your primary strategic objective is to keep a target out of someone else’s hands, “man up” and walk away. The truth is that too many good deals go bad. A bad deal (meaning one based on a bad strategy)? That is one trophy you can enjoy watching The Other Guy win.
Success: P&G acquiring Gillette
Failure: eBay acquiring Skype
TBD: CVS acquiring Aetna