Just Say No: When Appearing Like the Loser is the Best Leadership Choice

Abstract

This article explores the idea that a failed merger or acquisition can actually be considered a success when viewed from the management perspective of making seemingly compromising choices in order to preserve shareholder value. The article uses the failed acquisition of ABN Amro in a bidding war between Barclays Bank and “The Consortium” (The Royal Bank of Scotland, Grupo Santander and Fortis BV) as a case study. Financial analysis tools helped determine financial strength and create a comparison of the pre-merger and post-merger values of all five banks. M&A tools were used to analyse the deal process and the drivers for each of the banks when entering the deal. Finally, the use of the Cultural Web strategy tool helped to further analyse how realistic the projected synergies would have been. The share prices for The Consortium declined rapidly; the smallest constituent of The Consortium required government assistance soon after the deal was completed. From The Consortium shareholders’ perspective The Consortium deal was not a success. Barclays opted to walk away from the bidding war having acted with caution, and, in so doing, eventually saved their shareholders from losses. Barclays share prices increased after they walked away from the deal. For the Barclays shareholders’, walking away from the deal was a success.