Saturday, December 08, 2012

Oracles be damned!

Do their M&A predictions really work? And is there some ‘secret learning’ even they know nothing about? STEVEN PHILIP WARNER takes a closer look...

Despite fears of making it sound more like a sadistically-inclined moronic panic attack, let us get straight to the point here: which one of the following is most fatal – SARS, tuberculosis, typhoid, severe malaria, dengue, and… marriage (oink?!)? Let us go by the numbers. As per prior medical and social studies, dengue has a fatality rate of just 3%, severe malaria – 9%, typhoid – 10%, tuberculosis – 11%, SARS – 15%; and divorces – 38%! [Oh! Couples in love never knew this, did they?] Now allow us to marginally change course here: from social marriage to business marriages [and in the process reveal facts that CEOs in love with the idea of business matrimonies have perhaps missed out on]. Business marriage if put in that list above would walk away with honours glorified, in the name of the Queen. Period! And what makes us so non-sanguinely presumptuous? Well, the failure rate of M&As is anywhere between 75-78% (as per researches by HBS, KPMG, Booz Allen, et al), and it has earned shameful recognition for stripping-down shareholders to their bones, such that even the ruthless piranhas of the Amazonian rivers would pack a mournful retreat over the crime.

So here we are, in the midst of another downturn… six long years of prosperity at the bourses, and suddenly the shareholders are crying out for mercy. And what do the pundits say? Well, first they claimed that there was no downturn in sight, and that it was simply a ‘slight’ correction at the stock market. Then the real estate diamond turned cheap carbon. This was followed up with some major financial entities finding survival a next life dream. Then the virus spread to the manufacturing and other services businesses and the bourses crashed. And yet, we never learnt!!! We undertook panic discounts. Wrong! We cut back on our advertisements. Wrong! [But hey, aren’t corporations supposed to cut down on expenses during a downturn?] And finally, the dirt: we still believe those ‘gas-ball of Oracles’, that perhaps don’t even remember their respective birthdays; forget about predicting the ‘right’ future! Research proves it, and there’s no white-chalk teaching needed to reassure you that deal-making is too dangerous and fruitless during downturns. We undertook some primary research & digged deeper into some exemplary past researches and events... all of which we present in the following paragraphs. When you get to the last line of this article, you would have figured out why the whole argument began in the first place… and why there’s so much to learn for those demented ‘self-proclaimed’ Oracles!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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