Material Adverse Change

Lessons from Failed M&As

By: Robert Stefanowski

Narrated by: Danny Campbell

This book explores the full power of the Material Adverse Change clause and today's M&A in general. You'll dig into the real causes of M&A failure and discover the traits and practices that lead to poor results as you learn how to avoid these common mistakes and drive more successful deals. Recent case studies highlight common mistakes made - and propagated - by otherwise intelligent people, so you can identify and eliminate these practices within your own organization.

A large acquisition is already a delicate balancing act. Why complicate it with the exponential risk by not doing your homework? This book shows you how to apply best practices to increase your chances of successful deals and avoid potentially career ending mistakes.

The M&A market has grown to become a major factor in the global economy, yet many buyers do less investigation than consumers making everyday purchases. Material Adverse Change shows you how to slash risk and improve your chances of completing better deals.

©2018 Robert V. Stefanowski (P)2018 Gildan Media

Lacking in detail

I do not have an MBA - I was accepted to a prestigious MBA program and decided not to go down that route. I do have a PhD and am now a businesswoman, and also a nonprofit leader, and I sought this book out in the midst of nonprofit M&A issues looking for best practices and case analysis. The major issue is that, for a book length work, albeit a shorter one, is that the vast majority - probably 75% - of the M&A case studies in this book are the ones every single person knows before they even walk into an MBA program - the ones that everyone has read about over and over again. They are not presented in very much detail and new ground is often not broken beyond what everyone has already read in business journals. The summaries and conclusions are fly-by-the-pants and drawn without any kind of rigorous or quantitative analysis, even when the book is arguing that M&A's go sour because people ignore the fundamentals. It's hard to recommend this book unless you really do not pay attention to this space at all.

A nice tour of M&A accessible to the non-expert

I was surprised at the narrowness of the title, because the book's reach is much wider. Indeed, the MAC (Material Adverse Change) clause itself sinks into the background in large segments of the book. The book alternates between lists of "things to watch out for" in M&A deals, each with good compact explanations, and case histories. The businesses tend to be classic big-corporate business in various fields (banking, telecom, etc.), with bits of information often fresh up to within a year or two. However, the emphasis (by design) is not weighted heavily on cutting-edge tech examples, in the sense of, we are looking at AOL-Time Warner, several banking mergers (and other business-building paths) circa 2008, and so forth. Weirdly, the author offers anodyne praise for Jack Welch's departure from shareholder value focus in GE, and for diversity policies in GE, rather ironic by now as this firm seemingly pretty suddenly lost its identity and traction, and just sort of drifted and semi-dissolved before our eyes. The book is very principles-based, and might seem a bit staid and conservative in the sense of, this is not so much Michael Milken, it is not Peter Thiel (at least in his earlier phases), it is not, generally, move-fast-and-break-things. This has a longer-view Fortune-500 feel, in the size and type of businesses. But any lack of up-to-the-second products or services (and the stories and comments do go up into 2016-2017), or flashy proclamations, is made up, I think, by the emphasis of the underlying logic and principles which are pretty enduring, and very critical. The discussion of mergers from many angles reflects the nuances that only hands-on experience can bring. It is a very human craft that will not readily be automated.
Along the way, the treatment of British government meddling in a couple of banking mergers was very well done (and scary). Pitfalls of merging cultures, or of cross-border deals, are dealt with at some length. When, finally, having made this tour of several businesses and situations, the author turns to the MAC clause in particular, I found the treatment masterful. Here again is a scary interaction (at least from a CEO-fiduciary perspective) with government, in B of A - Merrill circa 2008. We do get as recent as Verizon and Yahoo, announced in 2016.
I am always up for sharpening my pencil with contracts matters, and I enjoyed this segment immensely. The MAC clauses read word-for-word in the closing appendices, mercifully short, are pretty hard to follow in audio. Wow, that is some dense legalese, even for me. But the whole book otherwise is highly listenable.
This book deepens my teaching in Business Law, because I had dealt directly with smaller businesses in transition, but not these bigger ones. I consider it a good stepping-stone to a deeper dive into M&A subjects. The book can be pretty thoroughly sampled on Amazon's site with the "look inside" feature.