Mergers of Equals

So two of the largest advertising giants, Omnicom and Publicis are getting together to form a company with $23 billion in revenue to fight off the inroads from digital competition. Might be a losing battle, data based marketing is growing fast.

But beyond that the deal is being billed as a "merger of equals" for a variety of reasons. The Wall Street Journal has a nice take on how merger of equals are a tough balancing act. True that.

A long time ago I was involved with a merger of equals. EarthLink and MindSpring. A guy named Stan worked for me at MindSpring. He led our retail distribution effort. Shortly after the deal closed Stan got on a plane to meet his EarthLink counterpart. After his meeting he called me from LAX. "Lance, I'm outta here, I resign." Stan then proceeded to tell me this, and I am of course paraphrasing.

I was involved with the merger of Babbage's Inc. and Software Etc. Never again. One merger of equals is all anyone should go through in their lifetime. What you guys should do is go to a football stadium, get all the EarthLink employees on one side and all the MindSpring employees on the other side, and get your leaders at the center of the field. Flip a coin. Winners stay and run the company, losers go home."

Stan quit. Could not talk him out of it.

As for my experience in a merger of equals I have to say that perhaps Stan and The WSJ are right. Mergers of equals have a unique set of challenges. In my mind it's better when one company acquires the other. At least that way everyone knows who is in charge. 

July 29, 2013  |  Comments  |  Tweet  |  Posted in Business, Current Affairs, Deals, Management