Mergers come out of the closet

In the heady days of cheap and plentiful finance and relaxed governance, before the US-driven collapse of financial markets set in, there were a considerable number of companies looking to float, raise capital and merge.

Where did they all go? As you would expect, when reality hit the fan many of these thought twice about such brave moves, and hid their plans in the back of a deep cupboard drawer labelled ‘Field of Dreams (pending)’.

The thought of floating, falling from grace and bearing the collective brunt of the investor agitatus species did not appeal. Remember that this is a species that, once deprived of its staple dividend feed, is characteristically known for its long term memory capacity, piercing stare and sharp tongue.

Failed capital raisings are less of a risk in the long term damage stakes, incurring only temporary embarassment when the money doesn’t appear in the amounts hoped for, but which may extend to demotion or removal from the Board depending on the level of shareholder angst.

Mergers are a little bit different. In the good times, having done the sums and the long hours in the boardroom and on the golf course, merger plans were hatched and the adrenalin flowed at the prospect of growth, enhanced positioning and market domination, where all competitors were freely offered a reversed Churchillian salute.

That was then. A new reality has now set in. So what happened to all those brave merger plans and brave captains of industry? Well, some plans were shelved but plenty remain in a holding pattern waiting for the financial barometer to shift from CHANGE to FAIR before they once again prepare for take off fuelled by renewed vigour, determination and a modicum of greed.

Many targets remain targets. Some are even more of a target now. Unwilling targets may now be less so, as their value plummets. With a lower price tag they may look even more attractive. Bargain basement opportunities may look too risky depending on the industry sector in which they reside.

All good stuff this, but what does it all mean? It means that once the barometer does shift and media barons raise their thumb in symbolic gesture sometime later in 2009, it will be safe to once more venture out into the sunlight beyond the dark shadows cast by the pillars of the Big Four and timely to buy back the Porsche and worship the Big Deal once more.

Branding consultants like myself will, with renewed enthusiasm, rattle cages and preach the gospel on good brand sense and the important contribution it makes to merger success. Will the deal makers listen? This is the question. In 2009 I think they will, because people learn from mistakes don’t they?

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work at www.heywood.com.au