Читать книгу Applied Mergers and Acquisitions - Robert F. Bruner - Страница 75

The first explanation for M&A activity lies in managerial psychology. Richard Roll (1986) suggested that the urge to merge is driven by pride, or hubris, in the face of considerable evidence that earning supernormal returns from acquisitions is difficult. Roll notes that the negative returns following mergers are well known. Only an irrational belief that your deal will be different could prompt you to strive where others have failed. Popular accounts of particular deals or deal makers would seem to support this view (see, for instance, Bryan Burrough and John Helyar’s classic 1990 account of the RJR Nabisco LBO, Barbarians at the Gate). The hubris of the rich and famous is a timeless theme, certain to sell books. And it is timeless for a very good reason: we benefit from the reminder that hubris undercuts rational analysis and self-discipline.

But the hubris hypothesis for M&A activity says too much and too little. It says too much in the sense that hubris could be used to explain most business failures. For instance, something like 70 percent of all new businesses fail within three years. Drug companies spend millions of dollars annually most of which hits dead ends. The revolution of digital computing has left countless failed firms in its wake. The odds of success are low in business start-ups, drug discovery, and technological innovation, and it takes an entrepreneur with at least a modicum of hubris to press ahead. We applaud hubris in these cases because it advances the welfare of society through the discovery of new products and markets. Isn’t M&A a discovery process as well? If hubris were to be the dominant explanation for M&A activity, it would need to explain the appearance of merger waves and the clustering of merger activity by industry.

Hubris says too little in that one wishes it had more prescriptive content. It urges us to avoid managerial irrationality, and warns that if we fail to do so, markets will judge accordingly. Through the research work of Kahneman and Tversky (1979, 1984), Thaler (1992), and others, we are gaining a clearer view of the role of behavioral influences in financial decision making. But behavioral finance remains a young field; more research remains to be done. Questions for the analyst include these:

 Who are the decision maker and his or her advisers? What, in their background, might suggest a tendency to disregard rational analysis and disciplined thinking? M&A arbitrageurs often develop psychological profiles of the CEOs of companies they follow. Though imperfect, these give hints about the decision maker’s ability or willingness to think critically about M&A proposals and to act in the interests of shareholders.

 Is the decision maker isolated or in touch with reality of the M&A situation? One hears about the imperial CEO. Like the fabled emperor who had no clothes, the CEO might have a culture of “yes people” who simply endorse what the CEO proposes.

 Does the decision maker operate under a governance system of monitoring and control? One of the benefits of good governance systems is to forestall problems of hubris. Chapter 26 discusses dimensions of governance.