M&A and the value of historical perspective

Posted on Saturday, 15 September 2007. Filed under: Business History, Commentary, Mergers |

Thanks to Andrew F. and his comment here which mentioned the importance of looking back to the late 1990’s in trying to keep a calm perspective on the current turmoil in the market.  We have noted earlier on this blog the parallels between the arms races of the Cold War and how the merger markets develop (see the blog commentary, ‘Merger Waves, Arms Races, and the Cold War’).  Lastly, there was a Harvard historian interviewed in ‘Management-Issues’ (which is also listed on our blogroll at the bottom of this page) who commented on why great business leaders would benefit from a better understanding of history (see  ‘Niall Ferguson on history and business leadership’). 

 I’d like to add another perspective on this topic.  The fact is that there ARE many historians already active in business.  This is also not a new phenomenon:  when I was hired by Morgan Stanley in 1983, it was a private partnership with a management committee of four.  All had majored in History when they were undergraduates (two at Yale, two at Princeton).  (Notably, all four also then went on to get their MBAs before entering investment banking.)  The 1980’s were a time of great success for Morgan Stanley, and I think the success of the firm in those days can, in some way, be attributed to some of the same perspective noted by Professor Ferguson, especially on the qualities of great leaders and how they differ between the military and political arenas and the business arena.

Our recent book on M&A looks at how military and business intelligence techniques can be applied to mergers and acquisitions.  This necessarily builds on an historical perspective as well.  We couldn’t have writen our book without drawing numerous lessons from many case studies, including some classic business deals that date back to the 1980’s (such as KKR’s acquisition of RJR Nabisco), but also some other deals (the oldest one referenced in the book being the UK’s merger of the Foreign Department with the Diplomatic Service back in 1919).

One important bias to note:  my own first two degrees were also in history, and I had the great fortune to write my Master’s Thesis under the tutelage of the master historian of 20th Century American history, John Morton Blum, now an Emeritus Professor at Yale. 

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