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Business Exposed98
Some time ago, I was interviewing a CEO of a FTSE 100 company,
which had acquired dozens of companies over the past years,
when we came to speak about investment bankers. He then asked
me, “Do you know who the Sirens were, in Greek mythology?”
I said “yes” (because I did and, of course, also because I did not
want to appear ignorant).
Sirens were beautiful maidens located on a small island surrounded
by cliffs and rocks. They would lure seamen who sailed near the
island with their enchanting singing, to shipwreck them on the
rocks.
“Well,” this CEO continued, “investment bankers are just like
Sirens.” That caught my attention. “How’s that?” I asked. “They
constantly try to seduce you into doing another deal, and they
don’t care at all whether that deal actually make sense for the
company. It’s like they are trying to make you shipwreck onto the
rocks for their own benet,” he said. OK . . . that’s one (slightly
peculiar) way to describe your own advisors . . .
Of course, he does have a point: rms and their shareholders are
not the only parties potentially beneting from a transaction.
A vast industry exists that initiates, values, negotiates, and
closes deals. However, the interests of such parties, for instance
investment bankers, may not always be aligned with those of the
rm. Especially when M&A times are relatively slow, investment
bankers may attempt to initiate deals from which it is not clear
that they are to the benet of the potential acquirer.
As an ex-investment banker told me some time ago, “When
times were slow, we’d all go through our address books and
discuss ‘who hasn’t done a deal for a long time’, because we
would usually be able to talk such a person into doing one.”
Yet, one could – if one really wanted to – make a good argument
that investment bankers are not necessarily to blame for this;
they are supposed to follow their interests and it is up to the
manager to say “no” to a proposed transaction.
Yet, deals – and investment bankers – can be seductive. Sometimes,
CEOs who are inclined to at least listen to their investment bank