The Synergy Trap (Hardcover)

~ (Author) "Acquiring firms destroy shareholder value..." (more)
Key Phrases: acquiring firm performance, related versus unrelated acquisitions, acquisition relatedness, United States, Time Warner, Independent Variable Model (more...)

Editorial Reviews

Review

Alfred Rappaport The Leonard Spacek Professor Emeritus, J. L. Kellogg Graduate School of Management, Northwestern University; Co-Founder, The ALCAR Group Inc. An excellent antidote for the CEO willing to pay steep acquisition premiums without fully acknowledging the increases in performance required before any value is created. As Sirower's many examples demonstrate, the winning bid too often materializes as a significant transfer of value from the acquirer's to the seller's shareholders. -- Review

Review

Charles R. Shoemate

Chairman, President, and CEO, CPC International Inc.

Every CEO and Corporate Director who has been in the path of the "WOW! GRAB IT!" acquisition locomotive should read this book!

Robert Cizik

Chairman and CEO, Cooper Industries, Inc. (retired)

A refreshingly revealing book on the "acquisition game" and the reasons why most are DOA (dead on arrival). Food for thought for those CEO's who recommend acquisitions and, perhaps more importantly, those directors who must approve those recommendations.

John E. Stuart

Chairman and CEO, ALCO Standard Corporation

The first book on acquisitions I've read which actually makes sense. Dissects and explains in understandable terms why and how they can actually diminish shareholder value. I highly recommend it.

Roy C. Smith

Professor OF Finance, Stern School of Business, New York University, Limited Partner, Goldman, Sachs & Co.

Should be of great interest to directors of public corporations and investing institutions. Sirower's findings suggest that managers need to be more vigorously restrained, unless they are able to meet higher standards by much tougher-minded independent board members.

Alfred Rappaport

The Leonard Spacek Professor Emeritus, J. L. Kellogg Graduate School of Management, Northwestern University; Co-Founder, The ALCAR Group Inc.

An excellent antidote for the CEO willing to pay steep acquisition premiums without fully acknowledging the increases in performance required before any value is created. As Sirower's many examples demonstrate, the winning bid too often materializes as a significant transfer of value from the acquirer's to the seller's shareholders. --This text refers to the Paperback edition.

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Product Details

• Hardcover: 304 pages
• Publisher: Free Press (January 23, 1997)
• Language: English
• ISBN-10: 0684832550
• ISBN-13: 978-0684832555
• Product Dimensions: 9.1 x 6.2 x 1.1 inches
• Shipping Weight: 15.2 ounces
• Average Customer Review: 4.2 out of 5 stars  See all reviews (4 customer reviews)
• Amazon.com Sales Rank: #870,136 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

15 of 18 people found the following review helpful:

3.0 out of 5 stars Interesting reading about how synergy can be a trap, October 26, 1999

By A Customer

This is a very easy to read book about how easy you can fall into the trap of paying a high premium for a company without having any concrete plans for how to achive the value gains through the value chain. He describes with some very good examples how to fall into the trap if you dont have a number of conerstones in place before the acquisition. The major cornerstones of synergy are stratigic vision, operating strategy, system integration and power&culture. These four cornerstones are linked closely together.

Chapter three has a discussion about the premium that the acquirer pay.

Part two in the book is an analysis of corporate acquisition strategies. In this analysis i didn't find anything new that I didn't know in advance

So my conclusion would be: an easy to read book with some very good examples of how wrong it can go (eg. sears, AT&T, Time Warner TBS,...), and he put a lot of emphasis on the importance of having the cornerstones of synergy in place before the acquisition as well as a discussion of competitor reations to acquisitions.

8 of 9 people found the following review helpful:

4.0 out of 5 stars The Acquisition Game, May 28, 2000

By	Franco Arda (London UK) - See all my reviews (REAL NAME)

Dr. Sirower does a remarkable job in showing how easy it is to lose the acquisition game by failing to define synergy in terms of real, measurable improvement in competitive advantage. By analysing the acquisition premium with his Required Performance Improvement (RPI) formula, Dr. Sirower shows how to determine in advance when the price is far above the potential value of an acquisition. The way managers who analyse the acquisition premium and concept of synergy can avoid to get caught and how to predict the probability of shareholder losses or gains (although the probability formula is not flawless). Regardless the good work done by Dr. Sirower, I wouldn't be surprised if M&A professionals don't like the book because of its highly critical approach to synergie effects.

4 of 5 people found the following review helpful:

5.0 out of 5 stars Packed With Knowledge!, August 31, 2001

By	Rolf Dobelli "getAbstract.com" (Switzerland) - See all my reviews (TOP 50 REVIEWER)    (REAL NAME)

Mark L. Sirower's thought-provoking and complex book is actually a critically acclaimed academic study that challenges the reasoning behind corporate acquisitions. Pointing out that acquisitions usually devalue the acquiring companies (a loss from which they rarely recover), Sirower delves into management fundamentals and mathematical analyses to get to the bottom of merger and acquisition problems. Three detailed appendices feature plenty of financial calculations, performance measures and data from various corporate acquisitions to back up his assertions. We [...] recommend this book to those involved in mergers and acquisitions and to other readers intrigued by the inside view of this "carnivorous quest."