Some time last year, Deloitte launched its “Straight Talk” series called M&A Lies (And Why They’re Sometimes True). It’s a catchy title, but after receiving a few press releases on the topic, I have to say that it’s painfully misleading.
Take today’s M&A Lie #3: “M&A matters only during a boom.” Since when was this a widely-held assumption? It certainly isn’t among investors.
We have listened for months as private equity pros fill the conference echo chamber with comments like “investing in downturn produces the best returns,” and “Now is a great time to buy,” etc. Everyone wants to play in a down market, so they can show off how resourceful they are, and how hot the returns on their ’08 and ’09 vintage funds will be. That makes Deloitte’s M&A Lie the opposite of a lie! It’s a straw man!
The point of Deloitte’s Straight Talk book series is to cut through hyperbole and consulting jargon that their industry seems to be plagued with. For that, I commend them. I just don’t know if these over-simplified 200-word advice blurbs fulfill that goal. Let me sum up a few more of the “lies,” along with the “truth” Deloitte provides:
Lie: Acquisitions are the only deals that create value.
Truth: Don’t forget about divestitures!
Lie: You know about all the good deals.
Truth: You don’t! You should have a pipeline!
Lie: Numbers don’t lie.
Truth: What about pre-revenue companies! You have to model then differently!
Lie: Employees like mergers or divestitures.
Truth: They so do not!
Lie: Customers like mergers or divestitures.
Truth: OMG they don’t either!
Lie: Cross-border deals aren’t different than domestic deals.
Truth: They totally are!
If the goal is to cut through the B.S., then why not just package this advice (which, I’m sure there’s some good stuff buried in there somewhere) as “Here’s Some Common Sense Advice From Deloitte.” I guess the fact that I’m even writing about the marketing campaign, negatively or not, is proof that it worked. Rats.
And despite my mocking, if you like free stuff, you can order a complimentary copy of the book, or any one of the firm’s 11 books from Deloitte here. (I would guess the IFRS one would actually be pretty useful.)