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The Biggest Game of All

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The Biggest Game of All

The Inside Strategies, Tactics, and Temperaments that Make Great Dealmakers Great

Free Press,

15 min read
10 take-aways
Text available

What's inside?

Why do big corporations make big deals, even to their economic detriment? Because they can — and here’s how.

Editorial Rating

8

Qualities

  • Innovative
  • Eye Opening
  • Concrete Examples

Recommendation

This book is a must-read for anyone involved in mergers and acquisitions in the cable or media industries, a should read for people doing M&A in other industries and a worthwhile read for anyone with an interest in business and investing. The author sat at the deal-making table with some of the best negotiators in the media and communications industries. His general advice about negotiating strategy and tactics is quite familiar, but he brings a unique insight into the motivations and manipulations of CEOs and investment bankers. Academics have long puzzled over why CEOs implement value-destroying M&A deals. Here’s a first-hand, eyewitness account of how these big deals come to be. Even if you have little faith in the astuteness of executives, the author’s revelations will surprise you. Just when you thought nobody could be that stupid, here comes an anecdote about another boardroom leader who was. The detail, it must be said, gets exhaustive at times, but if you love deals, getAbstract.com thinks that you’ll be too absorbed to care.

Summary

Why Big Deals?

Academic researchers who proceed from the basic assumption that business people, indeed all people, are basically rational have long grappled with the contradictory evidence presented by mergers. Mergers usually destroy more value than they create. When the CEO of a company makes a run at acquiring another company, and pays (as is usual) a premium over the market price of the target’s shares, the astute stock investor immediately sells the acquirer and buys the stock of the target. Such mergers normally represent an outright transfer of wealth from shareholders of the acquired company to shareholders of the target. Academics often ask why, in the face of overwhelming evidence, CEOs continue to do big deals.

First-hand experience at the negotiating table suggests some compelling reasons, though not the kind of reasons that are apt to find their way into the business school curriculum:

  • Incompetence, AKA the "shell game" - Consider Carly Fiorina, brought into the CEO’s job at Hewlett-Packard (HP) when the company was foundering. She didn’t improve the situation with her decision to buy a corporate jet and feature herself in a series of television...

About the Authors

Leo Hindery, Jr. is the former CEO of TeleCommunications Inc., AT&T Broadband and Global Crossing. Leslie Cauley is a staff reporter for The Wall Street Journal.

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