The MAD Hatters of Maritime: Mergers, Acquisitions and Divestitures

by Geoff Uttmark

In the M&A business, one company’s diversification is another’s divestiture. It can be a spin doctor’s heaven, an accountant’s hell, a raider’s playground, a founder’s dungeon. Emotion-laden buzz words like proxy fight, poison pill, bear hug, predator, vulture, tomb stone and white knight are forms of investment banking shorthand to describe strategies and tactics. By the time the first press releases are issued, they may signal an amicable fait accompli or the opening volley in a dramatic, protracted contest for control. In the end, with dust settled, swords surrendered and dead buried, the spoils are measured in money; to be more precise, increased shareholder wealth which is the most prized outcome. If a deal does not produce immediate cash gratification, however, other end game strategies can compensate. Such can include a stream of cost savings from lower operating and capital expenses, enhanced revenues from improved equipment rationalization and organizational synergies, and a host of less measurable but nevertheless important benefits called intangibles, lumped together under the catchall “goodwill” to make accounts balance. In this respect, Benjamin Franklin had it only partly right. After leveraging his meager treasure to attend the University of Pennsylvania’s Wharton School of Business, Poor Richard’s advice today might read:

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