ATLANTA, March 26, 2015
– Very smart executives can make very bad decisions when their enthusiasm or disdain for a deal takes over. Like courtship, getting to know your potential deal partner is usually done with one’s best foot forward, says Constance R. Dierickx, Ph.D. The Decision Doctor®, who has worked on successful mergers of companies large and small, private and public, global and regional for 20 years.
“The difference between failure and stunning success is not only related to the quality of your strategy and analysis. It lies in your ability to manage yourself through the decision-making process and the transition period,” said Dierickx, who has consulted with companies like Reckitt-Benckiser, Next Gear Capital and Manheim.
“Deals can be glamorous and interesting. They are often complimented with processes that resemble courtship rituals, except the fancy dinners leading up to a deal include some advisors who profit most if the deal goes through. Looking for a company to acquire and planning the deal can be thrilling. You look. You find. You conquer. It’s fun dinners, flirting with ideas and being told how wonderful you are,” said Dierickx, who has presented her keynote risk management speech, “Why Smart People Do Stupid Things” to companies, associations and organizations.
“If you are on the receiving end of this courting, it can be deliciously disorienting. Most of us understand the concept of being blinded by infatuation but few see the real influence it has on our thinking,” said Dierickx, a licensed psychologist and member of the American Psychological Association.
“Passion is good. Being overwhelmed is not. When the stakes are high, emotion affects what we do,” she said. “Billions of dollars and untold amounts of agony result from trying to fix bad decisions. Why not spend a little time on prevention? The return on investment is far greater.”
For a successful career in mergers and acquisitions, she advises executives to ask these five questions to avoid disasters:
- What do you know about the company you are considering buying or merging with?
- How do you know these things? Where did this information come from?
- What do you know about the people who interact with the target company including customers, suppliers, employees and creditors?
- What does the other party want out of this deal? I’m not talking about what they told you. Rather what does your own research say?
- How easy or difficult has it been to discuss the merger? A bad prospect makes a bad client. A difficult fiance makes a challenging spouse. People don’t magically change once the ring is on their finger or the check in their pocket.
“Humans are far more than brains. We are also highly emotional creatures whose thinking is influenced by amorphous, but powerful feelings. Our gut instincts impact our decisions far more than we care to realize,” she said.