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Show eeee The Salt Lake Tribune BUSINESS Sunday, - ~ ae HARVEY MACKAY A Good Deal SometimesIs One Not Made The ink wasn’t dry on the Disney/Capitol Cities ABC deal before the second-guessing began. “Bisner overpaid,” the critics said. “He could have had the same deal two years earlier for $11 billion,instead of the $19 billionit cost him.” Maybe. Ail I know is thatit ented, hard-nosed, a careerist whohadbuilt his resume jump by jump from one lily pad to the next, The only trouble was: I didn’t like him. He was central to the deal. And as badlyas I wantedit, I did not want him runninga business for me. So, it was not California after all. It wasel passo. Twoyears later, he was gone. I took another look at the company in 1991. By this time another new president — this was No, 4— had taken over. He was a quality professional numbers man, but not an envelope man. When I went through the plant this time, no one bothered to complain. I sensed that so many other potential buyers had come through, no one cared anymore, The price was right. The business wasn’t. I passed again. Facts, figures, surveys, union contracts, trends. They mean a lot, but they still don’t add up to people. If president No. 1 had stayed aboard, | would have made the deal. I was dazzled. Whatever “surprises” there were I would havetakenin stride as part of the entry fee. And it would have worked. But I’m equally sure I made the right decision when President No. 2 surfaced. The problems may have beensimilar, but the lack of chemistry between us almost guaranteed the kindof “surprise” subtitled “Chapter 11.” Mackay’s Moral: Mergers and acquisitions are like second marriages, a triumph of hope over experience. The language in the contract won't have much bearing on the outcome. In both cases. success dependson the quality of the people involved. Nationally syndicated business columnist Harvey Mackay is the author of “Swim With the Sharks Without Being Eaten Alive” and “Beware the Naked Man Who Offers You His Shirt.” 10, 1995 Sep F7 McDonnell Douglas Accused of Cost Shifting ‘THE ASSOCIATED PRESS WASHINGTON —- The Justice Department is taking the military’s No. 1 contractor to court, accusing McDonnell Douglas Corp. of “routinely mischarging” labor costs to multibillion-dollar airplane contracts. ° 40 e McDonnell Douglas denied the charges and notedthe allegations came from someone who was “terminated for cause.” That whistle blower alleged superviscrs authorized employees to shift costs. aye $46500/ ¢54 ' =y= Video & Enhanced Controller © Intel P-100 MHz Processor : © HP Laser 4 Plus $1369 © 75 MHz Intel @ PCI Video & Enhanced Controller © Free 2XCD ROM While Supplies Last ® Keyboard, Mouse, Windows & DOS © 8 MB RAM @ 850 MB Hard Drive © 1.2 GB Hard Drive © 3.5” Floppy Drive }@ 44” SVGA .28DP Color Monitor © 8 MB RAM, 1 MB Video, 256K Cache '® 3.5” Floppy, Keyboard, Mouse, Windows & DOS] 14” SVGA Color Monitor .28 DP © HP Laser 5P $856 © Only $45/Month OAC © HP Laser 4MPlus $1899 - NA ao ee. Free 2XCD ROM While © HP Laser 4L $499 Last Petarunar YO” polMHC ® 14,400 Fax/Data Modem 59.00 ¢4.MB RAM 449.00 © HP Laser SMP $1048 © 4XCD ROM w/Sound Blaster a ee 239.00 4 HP Desk Jet 600C $289 © 586-100 MHz Motherboard & CPU 299.00 ° © 486 DX2-66 Motherboard & CPU 199.00 . Sebel, 4UU takes 4 lot of guts to pull the irig- ger on any deal. No matter how carefully you think you've checked it out, there are going to be surprises. The word “surprise,” in a business context, is al- ways modified by the word “unpleasant.” The trick is to avoid the mousetraps before they break your neck. Years ago, I wanted to buy an envelope company in California that was a Fortune 500 subsidiary. 1 met with the president. He was smart, straight, knowledgeable abouthis business andits value and also a seven handicap in golf. Notthe least of the attractions of the acquisition — and one my counterpart played like a pro on his home course hustling a visiting duffer — was that my business visits could coincide nicely with the considerable time Minnesota golf courses were under6 feet of snow. I spent so much time wandering through the piant, and erawling around the machinery, that one shift asked their union rep to have me thrown out. They thought I wasan efficiency expert and a threat to their jobs. Our accountants met with their accountants. Our lawyers met with their lawyers. We weren't far apart on price. Then, “Surprise!” Mygolfing partner was no longer the president. He had been offered a chance-of-a-lifetime job at the home office. With no time to complete our deal, he was onhis way to Chicago, where the goif wasn’t that great, but the future was. Suddenly, I had a new aegotiating partner. He was an equally good golfer, but he decided to change the rules of the game. Since the old president was history, the old deal was out. Presi- dent Ne. 2 would show his boss how a real deal should be done. No more Mulligans for Harvey. Scorecards to be checked, verified and certified after every hole. He read me right. He knew that The best relationships I wantedthe deal, and not just for a respite from Minnesota winters. Wedid not have a presence on the WestCoast. We neededone. On the previous round, President No. 1 had charmed meoutof my spikes. Oh, I had done some checking. The company was a major player, aggressive, well-managed, well-regarded by customers, vendors and competitors. But I still had not conducted the sort of rigorous due diligence effort I now put into looking over President No. 2. I even interviewed one of his high school teachers on the phone.He wastal- last a itetime. 7 e understandthat relationships count. 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