Don’t ask the barber whether you need a haircut!

When a big merger or acquisition is announced, I am often asked two questions:

What stakeholder is benefiting from this transaction?
Is this lowering the cost of care?

I struggle with both questions. I do know it usually makes a bigger organization that at least one of the architects of the deal get to run.

This week, Paul Keckley does a great job exploring that very topic:

Once a CEO hungers for a deal, he or she will never lack for forecasts that justify the purchase. Subordinates will be cheering, envisioning enlarged domains and the compensation levels that typically increase with corporate size. Investment bankers, smelling huge fees, will be applauding as well. (Don’t ask the barber whether you need a haircut.) If the historical performance of the target falls short of validating its acquisition, large “synergies” will be forecast. Spreadsheets never disappoint.

Check out this week’s column, it is a great read.

Paul Keckley’s website