The Truth about a Merger of Equals . . .

 There is no such thing as a merger of equals!

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On May 6, 1998 the largest merger in automobile history was heralded as “A Merger of Equals” and promised to propel the new DaimlerChrysler as a leading player in the global marketplace. The deal was valued at $38 billion and created the 5th largest global automobile company.

dcxThe “honeymoon” lasted just three years and during that time the stock of DMX fell off the cliff.  In 2007, Daimler sold Chrysler to a private equity firm for $7 billion! A $31 billion loss, not to mention the costs of lost momentum in the marketplace and the human costs of derailed careers.

Here’s some of the behind the scenes truth about this so-called “merger of equals”. Between 1998-2001, Chrysler was neither integrated or granted equal status, and early on top executives from Daimler in Germany moved to Detroit to run Chrysler, prompting an exodus of key Chrysler top management.  

In the autumn of 2000, DaimlerChrysler CEO Jurgen Schrempp stated publicly, in the German newspaper Handelsblatt, that he had always intended Chrysler to be a subsidiary of Daimler.  “The merger of equals statement was necessary in order to earn the support of Chrysler’s workers and the American public, but it was never reality.”

And the same tune gets played over and over.  Sprint – Nextel, United – Continental, Glencore – Xstrada, Omnicom Group – Publicis Groupe.  Most times this scenario seems more like the mating of two dinosaurs, noisy and messy, but destined for extinction.

The creation of customer and shareholder value following a merger takes real leadership courage, not PR and fancy promises.

When you hear the words “merger of equals”, grab your wallet and run!

Tight Lines . . .

John R Childress

john@johnrchildress.com

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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