The Self-Deception of Irrationality

A blinding influence that can intuitively incapacitate your effectiveness at work…

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Once upon a time, there was a brave king called….”

Picture a stretched sun-filled summer noon, in the leafy shadow of the portico of a placid hamlet-home on the corner of a small town in the west of India, a toddler innocently listening to the story…

When I look back at my growing years, I realize that my mother’s folk tales or father’s mythical heroic legends had a great influence over the shaping up of my life values.  How to be like our brave patriotic heroes, how one has to struggle hard to objectify the dreams, which behaviour to be side-stepped, and  many other pieces which are characterized ‘Good’ and ‘Normal’ in our daily life.  Whether I acknowledge it or not, my parents, teachers, and other family elders had a lasting and empowering influence over the final architecture of my humble native wisdom.

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Stepping off on the wrong foot…!

 “Sometimes your best investments are the ones you don’t make”

-Donald Trump

 

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 My experience on one of the most powerful Strategy tool: M&A

A testimony further away from financial check-mates…The Human Equity.

Why so many mergers fail?

Why there are loads of infamous M&A stories across geographies? At times I wonder, how a proposition announced so lucrative the other day, can turn out to be a financial hemorrhage even before its first anniversary.

In majority of the cases, over a period of time, the acquirer realizes that the company would have been much better off without strategic M&A initiative. This is an unpleasant reality notwithstanding of any evaluative method you select for the success assessment. You may analyse it as Profit-to-Earnings Ratio or IRR or Stock-Price Fluctuations or any other relevant matrices. The unswerving signals on tangible M&A realizations are never encouraging. Finally, it is realized that in most of the deals, the ROI is less than even the cost of the interest on the capital invested. So, a year down the line, the entire focus shifts from multiplying synergy of merged entities to inventing few face-saving measures, like distressed asset disposals, fixed cost optimizations, ‘tax choreography’ to effectively pump-up the numbers, condemning  non-cooperative people and culture of the acquired company, ring fencing deserting critical talents, concessional offers to customers …and many similar recovery manoeuvres. Continue reading