M&A, The “Mad Men” Way

 If you have worked for a large company for any length of time, chances are that your firm has been involved in multiple mergers and/or acquisitions. This phenomenon has become a more prominent part of big company life since the 1980s, and the publishing industry has been a prime example of the kind of consolidation I am talking about.

org-chart-by-handIn fact, almost every company I ever worked with was either acquired or was a frequent “acquirer.” After starting at Prentice-Hall in 1982, Simon & Schuster purchased Prentice-Hall in 1984, in one of the first major major publishing acquisitions. Later I worked for a small division of a larger [textbook] publisher—Dow Jones-Irwin—a tiny publisher of financial books for professionals. All of Irwin and Dow Jones-Irwin was soon sold to Times Mirror (publisher of the Los Angeles Times). Less than a decade later, the company was sold again to publishing giant McGraw-Hill.

Overall, Hollywood has not done a great job depicting mergers or acquisitions on the big screen. Wall Street—released in 1987, directed by Oliver Stone and starring Michael Douglas and Charlie Sheen—is probably the best example of showing how Wall Street actually operates.  The line in the movie uttered by Douglas’ character, Gordon Gekko, “Greed is good,” was actually taken from the playbook of former Wall Street inside trader Ivan Boesky (who spent years in prison for insider trading).

Barbarians at the Gate (based on the bestselling book), starring James Garner—released in 1993 on HBO—did a great job of depicting the greed-gone-wild decade of the 1980s, at least in a campy way.  It gave people a behind-the-scenes look at the wheeling and dealing on a multi-billion-dollar scale and what people will do when there is that much blood in the water.  However, neither of the aforementioned movies showed what it was really like to be one of the employees or managers of a company about to be taken over. At least, they didn’t make you feel it.  

That’s where the AMC show Mad Men comes into play.  Set in the 1960s, this award-winning show about the early years of advertising and Madison Avenue is known for its authenticity and strong writing. Its third season finale gave people a real feel for what it is like to be taken over by what one character called a “sausage factory.”

This exchange tells the tale: the often unsympathetic but always interesting Don Draper blasts this out to the head of his soon-to-be-acquired-for-the-second-time-in-a- year-company—Bert Cooper:

“Who the hell’s in charge? Accountants that want to turn a dollar into a dollar-ten? I want to work. I want to build something of my own.”

That brief excerpt sums up the frustration of the millions of employees and managers that have been swept up in the merger mania of the last 25 years.  People want to work and build things, and in the U.S. we have sometimes forgotten that. Instead, we have moved trillions of dollars and made a mess of the financial system and in turn the economy as a whole. In other words, we have created a culture in which making and moving money has  replaced making and moving real goods. 

In that Mad Men finale, the managers of the business find a way to get out of their contracts and start their own company—Sterling Cooper Draper Pryce.  While that show was terrific and genuine for its time, that could not happen today. That’s because lawyers have gotten much more involved in corporations over the last decades, and today, almost all company contracts contain non-compete clauses. Still, I urge people to get their hands on that last episode of the third season, just to feel what it is like when your company goes from one “John’s bed to another,” which is the way the fictional character Roger Sterling summed up what was about to happen to the company he worked so hard to build.

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