Most American taxpayers observe large business mergers and acquisitions with a sense of amazement as hundreds of millions, even billions of dollars get moved around in a seemingly complex game where the players are supposedly brilliant negotiators, capable of erecting complicated structures. The reality, of course, is far from the the self-serving PR with which bankers have burnished their columns of reverence.
Complication quotients on large mergers and acquisitions are directly proportional to the extremes of egos feeding at the trough. Most mergers do not work out. Odds of failure are dominant — not surprising since integration is too regularly considered long after each side has lied to the other and the deals have been concluded. There is such a thing as ‘corporate’ culture, which is also rarely examined until too late, and elements like competitive advantage and market presence potential, and . . . well . . . don’t get fastidious. Those are not Wall Street considerations and once CEOs are at the table, egos are in play and there’s usually no turning back. Why? M & As have surged, the too-big-to-fails have mushroomed, companies have doubled and tripled in size, and yet the economy is stagnating, even continuing its recession.
In all publicly traded companies, Wall Street controls the game. Wall Street controls most CEOs and Wall Street makes billions in fees from both mergers and acquisitions.
One the biggest M & A events in American business history was the notorious 2002 $25 billion acquisition of Compaq by Hewlett Packard. In Fiorina, Wall Street had an agreeable CEO in hand. HP’s core foundations in measurement and medical technologies were spun-off in 2000. The HP Board of Directors had demonstrated serious loss of direction prior to Fiorina’s hiring, but I remember at the time feeling strongly that the former Lucent CEO’s clearly inappropriate acquisition of a tiny PathNet was a ‘Wall Street’ controlled play. Meaning, Fiorina was ‘in play.’ What?
Wall Street had directed Florina, playing to the ego and ensuring healthy future ‘bonuses’ worked wonders. Would even a barely competent and independently minded CEO have acquired tiny PathNet (100 employees and $1.6 million revenues) company for $440 million with a potential up-side price of $2.1 billion? Not a chance. PathNet declared bankruptcy in 2001.
Wall Street doesn’t care much about the validity of the M & As it imposes on corporate America. Wall Street doesn’t care about the employees. If there’s an ‘employee’ at the top in the form of a CEO who will do its bidding, that is all that matters on the Street.
Fiorina’s history with Wall Street is long and deep, and the trail she has left behind of questionable accounting practices, billion dollar write downs, and tens of thousands of ‘released’ employees, are public record. Wall Street demanded short term perceived success, even if creative accounting methods were ‘de rigueur’, and Fiorina was one of those executives who delivered — long term be damned. Vision? There is no room for wisdom, inspiration and creativity when you ply the Wall Street creed — “what is the stock doing today, give me good news, oh, and here’s an acquisition for you.”
Successes and failures are a constant in our economy and not in and of themselves reasons for concern, however, the reasons, particularly consistent ones, should provide insight into anyone reaching for the Oval Office. On the campaign trail, Fiorina has done her homework and has evidently been diligent in her research. She presents strongly, better than most Presidential candidates. She is an outsider to the Washington morass, and would be a formidable opponent for anything the Democrats might nominate. Nevertheless, . . . .
As I have noted previously in numerous articles including this recent one, Wall Street’s philistine and destructive influence on America’s middle class and principal taxpayers through its control of the political class and its dominance over currency must be presented with a counterweight. This opposing force must be independent, cannot be a panderer and must be one which has not been ‘played’.
As she rises to the top of the poles, it would be a galvanizing moment if Fiorina could excavate into the recesses of the person she might once have been, where she does not seem to have dug for some years, and discover the temerity to make an emphatic statement against her too-close-for-America’s-comfort friends on Wall Street.