Consistent leadership, with clear vision, alignment of all key players are key to success in M&A deals. Forget about your ego and be committed to efficiently deal with behaviors identified as dysfunctional in the new setup. Here is a lesson to be learned to create a healthy organisation.

A large, publicly held conglomerate had purchased several mid-sized businesses in the southeastern part of the United States.  Les, the CEO, who had previously owned the businesses and sold them, was now a director of the parent company.  After the acquisition was complete, Les decided that the parent company was improperly managed, and that because of this mismanagement, he wasn’t getting a good enough return on his investment.  He was at odds with the CEO and decided that the only way to regain his hold on the company was through stock acquisition.  He set out on a mission to cast suspicion upon credibility of Wilbur, the CEO’s leadership, whereby trust in Wilbur would be eroded and enable him to replace the current CEO.  This scenario was similar to the Shakespearian tragedy: Othello.  In Othello, Iago schemes to destroy Desdemona, the wife of Othello, through planting the seeds of mistrust in Othello’s mind.  Slowly, but surely, Othello begins to believe the case being built against his precious wife, and unconsciously searches for evidence to confirm his inaccurate suspicions.

In the same methodical manner, Les embarked upon his strategy to unseat Wilbur.  Aggressively, he bought up stock and after he had amassed approximately 11% of the total available stock, he then secured himself a seat on the board of directors.  Then he started leaking information to the press about how the company was poorly managed, and because of the unwise decisions that were being made the company was loosing their market share.  He sought every opportunity to get his name into the press to increase his visibility and cast doubt on Les’ leadership.  He began lobbying the former CEO, Grant,  by whispering in his subconscious, casually dropping suggestions and casting aspersions about how Wilbur was the inadequate for the scope of the task, and subsequently the wrong person for the job.  He strove to undermine Grant’s confidence in Wilbur.  It was corporate chemical warfare, subtle, subterranean sabotage.  He lobbied with other board members, and at a certain point, he and his allies controlled 25% of the total public stock.  His strategy was working.  As profits slid, Wilbur’s confidence began to erode as well.

Wilbur started vacillating.  Calls from analysts and solicitations from investor relations made him anxious.  He made decisions, then within days or weeks he reneged.  He started to doubt himself.  He had lost his confidence, his self-trust, and his conviction. He was also loosing his constituency and at times his grasp on reality.  There were moments when he even thought he was loosing his mind. Who could he trust? What was true? Being alone at the top, he was susceptible to innuendo and nuances. What was once a strong and competent leader was now deteriorating into a nervous, paranoid, uncertain, shell of a man.  Ultimately, Les was successful.  It took six months to accomplish the mission, but Wilbur was ultimately ousted, and Grant, the former CEO was reinstated.

During this six-month period, coaches and consultants were brought in by Wilbur to study different aspects of the company.  Consultants studied the budgets, the structure, reporting systems, marketing, operations, the validity of different departments, the use of space, the effectiveness of programs, and anything else that could be analyzed.  Since the leadership at the top was shaky, the reverberations could be felt throughout the organization.  Programs were initiated and then within 90 days suddenly cancelled.  New space was acquired, designed, and planned and then almost overnight, abandoned.  New systems were purchased and developed and then dumped.  Decisions were impulsive, compulsive, and mercurial. Issues were insufficiently researched, and inadequately thought through in terms of the long range consequences and expensive decisions were executed daily.  The organization reflected the insecurities of the CEO, as well as the power struggle between Les and Wilbur.

CORPORATE QUAKE

After Grant replaced Wilbur, a search was conducted for a new CEO.  A person was vetted who lasted for nine months and was again replaced.  Within four years, four different CEOs with different management styles, priorities, procedures, and processes contributed to the corporate quake.  The change of the leadership created organizational vertigo, and employees were uncertain from day to day whether they were coming or going.  From the laissez-faire style of management to the “Thou shalt do what I ordered” approach employees were caught in the dizzying revolving door management.  Profits dropped from $28 per share to under $7 per share.

Because of the lack of consistent leadership, with clear vision, alignment of all key players, the bottom line suffered terribly.  This was a case of egos running wild with complete unrestraint.  There were attempted interventions to curtail the situation, but none could stop the momentum.  Since there was a lack of commitment to deal with the dysfunctional behaviors: the conspiracy, the undermining, the sabotage, and the calculated demise of the designated leader, there was no way to bring about a healthy organism.  This is a clear case of organizational “Negaholism.”  One person’s desires and aspirations eclipsed the organizational strategy, purpose and mission and affected the lives of tens of thousands of employees.

Written by Dr. Chérie Carter-Scott, PhD, MCC

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