While the specific tale of Comair’s acquisition of Metaco is unique, the story of failed acquisitions is as old as corporations themselves. Most mergers fail to deliver on their promises and end up costing more than they produce. In this episode, Alec Hogg and I discuss the lessons that can be learned from Metaco’s struggles. We also talk about IQ and what it really means – I’m a confirmed IQ sceptic, but there are plenty of people out there who put a lot of stock in the number. – Felicity Duncan
When the founders and bosses of Metaco signed up to join Comair as a strategic acquisition they were focussed on the upside. Comair had big plans for an all-new business line and it seemed like the sky was the limit. But a shift in direction at the top sent the deal into a spiral. With few revenue sources outside of selling its services to a newly thrifty Comair, Metaco struggled to deliver on its financial goals and in short order the deal unravelled.
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As is so often the case in M&A activity, the Comair acquisition of Metaco foundered on the Scylla and Charybdis of strategy and culture. It’s no easy matter to weld together two distinct corporate entities. Much like an organ transplant, the threat of rejection is high unless the merged entity is willing to swallow strong medicine. All too often, the organ fails. Metaco’s story holds an important warning for all companies considering taking the plunge into a merger or acquisition.
A different but equally important set of lessons can be drawn from a piece published this week on Biznews dealing with the question of IQ. Like Alec’s son, Travis, I was enrolled in a “gifted child” programme after having to take an IQ test at school. But subsequent years of reading and research would convince me that there is no meaningful link between IQ and life satisfaction or career success. Indeed, I don’t really believe in IQ at all – its measurement is notoriously fuzzy and culturally contingent. Still, many people place a lot of stock in the idea. If you’re one of those folks who think IQ is important, Alistair Duff’s piece on the subject – republished with permission from FirstRand’s Perspectives portal – is well worth reading.
