

AOL dumps $850M Bebo acquisition - Why big M&A rarely works - brlewis
http://dondodge.typepad.com/the_next_big_thing/2010/04/aol-dumps-850m-bebo-acquisition-why-big-ma-rarely-works.html

======
kijuhygfhjk
>Why big M&A rarely works

Big M&A always works, all the people involved in this got large bonuses and
promotions, then they left for new jobs with experience of managing $Bn M&A
deals - which gets them up the promotion ladder.

What happened to all the people at AOL who said it was a bad deal, where are
they now?

~~~
lenley
Yup that's the real issue... big bonuses for big M&A deals... just happened
with Kraft buying Cadbury, huge bonus to the CEO for simply doing what they
were hired to do.

[http://yglesias.thinkprogress.org/archives/2010/04/corporate...](http://yglesias.thinkprogress.org/archives/2010/04/corporate-
gigantism.php)

"Brief synopsis: Kraft acquires the 200 year old British confection-maker
Cadbury after a heated battle. The chairwoman and CEO Irene Rosenfeld (already
not a good sign, best practice is to separate the two roles) was awarded a 41%
pay increase, bringing the total to $26 million for 2009 for her “exceptional
role” in the Cadbury transaction, as well as her “commitment to fiscal
discipline."

... "The punchline is that Kraft actually screwed up. Part of their plan for
Cadbury involved closing off the company’s pension plan but there’s “an
obscure clause in Cadbury’s pension trust deed that makes it almost impossible
to close the scheme.” As a way ’round this obscure clause, they’ve issued an
ultimatum to employees, threatening them with a pay freeze unless they
“voluntarily” agree to opt out of the pension plan. Point being that no matter
how obscure the clause may or may not have been, this is supposed to be part
of your due diligence before you buy a company, to say nothing of
“exceptional” performance"

------
farrel
All those AOL'ers who were laid off during 2008-2010 must be so glad the money
saved on the reduced headcount payroll went to investments such as this.

~~~
lionhearted
Wrong way of thinking about it. A company like AOL does need to invest in
modernizing their business model somehow to stay relevant. The Bebo buy was
rather poor, but the general idea of rebuilding AOL into something else is a
good plan. If they don't remake AOL into something else, the layoffs will keep
coming as the company dies a slow death.

------
ramanujan
One of the most successful big acquisitions in history was Illumina's $600M
acquisition of Solexa in 2006. They moved at warp speed to get out the GA and
the story since that point has been world domination in the sequencing biz.

(this kind of success for big m&a is, as dodge notes, exceptional)

