Who’s Really in Charge?

Our cover story in this issue on managing talent in acquisitions reminded me of a story that a very wise and experienced m&a pro told me some years ago about the importance of specific people in making a deal work. During lengthy negotiations in which he represented the buyer, the top management of the target continually deflected key questions to a lower-level manager that I’ll call Joe. It became obvious that Joe, although he was not directly involved in the talks, was the company’s go-to guy – who not only knew more than his bosses about what was going on but had to be retained to make the operation work after the deal closed. In many respects, the acquirer was lucky. The seller’s principals, even if inadvertently, tipped the buyer as to who really was in charge. One has to wonder how often the top managers or owners don’t let on that some unheralded subordinate really runs the show and in effect are not the telling the whole story about the true source of the firm’s value. The recent run of corporate scandals creates almost the reverse of that situation. A long line of accused CEOs are claiming innocence on the grounds they were not aware of the shenanigans being engineered by subordinates. Their claims will be determined in the courts. Regardless of the context, the lesson for acquirer teams is to know whom you are dealing with. Don’t pray that the other side will somehow tip its hand. Be aggressive in determining who’s telling you what you need to know and who’s giving you a snow job. We’ll have more on this issue from negotiating and investigative experts in future issues. Martin Sikora Editor Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com