- Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner
- Mergers and Acquisitions from A to Z by Andrew J. Sherman and Milledge A. Hart
- Deals from Hell by Robert Bruner
By Steven D. Levitt and Stephen J. Dubner
William Morrow, 2005
Recommended by David M. Smith, PhD, Associate Professor of Economics
Levitt and Dubner provide enough material in this book so that every reader is likely to find something they consider offensive, or just plain wrong. However, it is often the most provocative of books that make us think the most and learn the most. Levitt, the economist, and Dubner, the journalist, apply unconventional thinking to conventional wisdom and offer up a way of thinking about how the world works, a world based on incentives. Given Levitt’s background, this shouldn’t be surprising, but the topics they confront in the book are surprising.
The book is unfortunately titled, since it suggests to the prospective buyer that the contents contained therein are not very serious. Nothing could be farther from the truth, as the authors tackle subjects as weighty as the Ku Klux Klan, inner city gangs, guns, and abortion and with a nod to the whimsical, topics such as sumo wrestling.
The authors put forth the notion that we can explore new truths if we delve deeply enough into available data and give consideration to what it might be telling us. Thus the wisdom from the authors does not lie in the subjects that they cover as interesting and entertaining as they may be but in the process they go about in exploring truths.
One question that the authors tackle: Why do drug dealers live with their mothers? Answers to this question may be primarily relevant to sociologists, but the process in which the authors discover this and related truths can be applied to a whole host of other questions. Thus the book becomes relevant to anyone interested in searching for answers to questions, big and little alike.
By Andrew J. Sherman and Milledge A. Hart
Recommended by Kent Rhodes, EdD, Practitioner Faculty of Applied Behavioral Science
Sherman and Hart’s Mergers and Acquisitions from A to Z attempts to address the basics of what managers need to know about mergers and acquisitions. Written from a “30,000 foot level,” the authors cover everything from the differences between a merger and an acquisition to providing sample letters of intent and including suggested work schedules toward completing a deal.
A disappointing feature of the book, however, is the authors’ almost parenthetical treatment of deal breakers especially those that are more difficult to define, such as cultural and leadership differences that are potential issues in the due diligence process. Research in the field is clear that addressing such issues early on could save companies tens of thousands of dollars at the least if, in fact, one of these issues becomes a deal breaker.
A novice in the world of mergers and acquisitions should find this book to be a good, but very basic introduction to the field. Highlights include sections on due diligence processes and procedures and include a healthy mix of potential problems and exposure areas during that process. There are other sections of the book that readers will likely find to be an invaluable resource simply because locating this kind of specific information in a “one-stop shop” effort is difficult at best. Those sections include an overview of regulatory issues, ways to structure a deal and how to finance the acquisition.
By Robert Bruner
John Wiley & Sons, 2005
Recommended by Steve Ahn, Adjunct Professor of Finance
Bruner’s Deals from Hell is a well researched, analytical, useful, impactful lesson disguised as an easy-to-read book. Bruner writes with a very analytical, objective, and clinical style which makes this book extremely helpful for learning from a case approach without biased interpretation, selective data, and useless rhetoric.
Bruner begins by contending that M&As (mergers and acquisitions) are often successful and do create shareholder value, contrary to consensus academic views. Bruner admits, however, when transactions have failed, many have failed miserably. He uses ten specific “deals from hell” as case studies for what not to do, and more importantly, how to avoid fatal errors, six of which he identifies: “complexity,” “tight coupling” (lack of flexibility allowing crises to spread), “business not as usual,” “cognitive bias,” poor risk management, and team flaws. His ten deals span 1968–2002 and cover some of the most notable failed transactions that any business professional or student should recognize: among them, AOL/Time Warner, ATT/NCR, and Sony/Columbia Pictures. Some might criticize the lack of more recent deals, but I think such criticism ironically validates Bruner. His six fatal errors apply to nearly any deal gone awry recent or on-going.
Anyone interested in M&A particularly the hordes of MBA students wanting to work on Wall Street would benefit from reading this book. Students will gain insight sometimes disturbing, often amusing into the very fallible world of corporate deal making. Corporate executives can privately learn from mistakes without having to admit being on the path to making any themselves. Investment bankers should read this as a history-repeats-itself book-of-don’ts from a client’s perspective.
Former executives and Wall Street investment bankers (myself included) will find this book thought-provoking, and at the least, fun reading. I can even imagine executives responsible for the ten failed transactions in this book wanting to read it, since Bruner focuses on issues, not necessarily on mismanagement or personal criticism. (The title even implies that deals can fail at inception rather than solely due to executive shortcomings.)
The last chapter is a “Memo to the CEO” emphasizing growth in economic value rather than growth for the sake of growth, particularly when using M&A as the means. Though not a new point, Bruner’s use of the directive memo is a superbly effective vehicle to deliver a meaningful practical message and to conclude a thought-provoking, very useful book.