Merger of equals - Is that so?

Towers Perrin and Watson Wyatt announced that there were conducting a merger of equals yesterday. If that is the case, and this becomes successful, then it will be a first for sure. I have always felt that when someone says merger of equals, then really it means a merger of unequals with the stronger partner soon taking over the weaker one. In this case who is the stronger? Possibly Wyatt - and how do i say that - because the Wyatt CEO is continuing as CEO. The last time I heard of a merger of equals was Daimler Chrysler - and we all know what happened there. This "merger" will be interesting to watch - the two have somewhat different cultures.

Acqusitions by Indian companies - part 2

So here's what they should have done (and do in the future) - see how value is being created through an acquistion - remember there is no such thing as a merger of equals - value is rarely created in a merger. And once they figure that out work towards putting in place a plan that generates value - for the acquirer and the acquiree . They (and all others) should avoid the LIB syndrome - create a value target and then force managers to achieve it, by hook or by crook (LIB stands for the Loser Investor Banker).

If Indian companies cant figure out how value is being created for the new company and put specific processes in place to drive the value creation opportunities, they should avoid acquisitions.

Not just the Aussies, but Indians are also Racists - so let's get some perspective.

Indians in Australia are complaining about racist attacks on students there. My sympathies are with the students and I hope the perpatrators get punished. But in all the noise about racism, we people of Indian origin easily forget how racist we ourselves are! For sure racism in its worst form thrives in India.


In Mumbai, many local Marathis look down on outsiders and often treat them with scorn. People from the south and migrant workers are beaten up by goons from chauvinistic political parties. In Delhi, Calcutta and other parts, the story is not dissimilar. Malayalees refer to Tamils as Pattars, Bengalis are Bongs and Marwaris are "kanjus marwadi". Gujaratis are money minded Gujjus and Sikhs are dumbwitted "surds" (and in my opinion, they are the only race capable of laughing at themselves).

Physical attacks on people of different races are not uncommon in India. And they are often perpetrated by well heeled folks who use goons. And where were all the Indians when an Aussie missionary, Graham Staines and his two innocent kids were burnt alive when sleeping inside their van in Orissa? That was a crime so heinous that it still makes me shudder. Not a single Indian Film actor raised his voice in protest then. Why does Mr Bachchan make a show now?

I am an Indian, brown in color, and proud to be so. But how does it matter? Most Indians dont understand that skin color doesnt matter. What else would explain the burning desire among Indian women to want to be fair complexioned, for Indian parents to have fair skinned daughters and sons, and Indian men to want to marry only fair skinned women? Check any matrimonial ad - "Sought handsome well qualified groom for fair complexioned beautiful (but uneducated) girl, can cook, sing and sew etc" - Or as they say in tamil, "Aval, colorrara irukka" or "avallukku color kuncham koruchalla irukku".

Now I am taking some liberties here - but hopefully people will understand that i mean women no disrespect, but there is a whole Industry thriving in India built around the promise of making brown people like me look white! And we say others are racist! Racism, whether by Aussies or by Indians is wrong!

Taxing global income - not a good idea wholly

I havent seen the details of the proposal, but if what I have heard is true, then, the Obama administration is going to tax all global income for corporatiosn. I can understand and agree with the rationale for dealing with companies who use tax havens. But I cant accept the logic for taxing in the US, the income say a company like CISCO receives in India, if the CISCO is already paying taxes in India. Where is the incentive to go overseas then?

Why I was right about the acquisitions by Indian companies - I didnt like them.

Last year India and the Indian media had celebrated wildly when the Tata group bought Jaguar, Landrover and Corus Steel etc, when other Indian companies bought more companies around the world.

Sure it is good to see Indian companies coming out of their own mental and capital constraints and venture boldly around the world. It is heartwarming to see the can do spirit - time for the emerging market economies to take on the world. But I wasnt a big fan of some specific deals then and for sure I now feel vindicated.

Because in their euphoria and desire to do the deal - they ended up overpaying and taking on a pile of debt, compounding the problem with an integration strategy that beats all known logic. There is always a business and value logic to doing M&A - in the case of the Jaguar deal, the Tata group threw all value logic out of the window - why else would they buy something which nobody else would touch with a barnpole! and pay so much for it! There was no subsequent integration and cost reduction initiative. Where was the value creation going to come from?

My sense is that it is time for Mr Tata to think of a successor for himself. Some of his judgement may not have benefited shareholders and customers and his comments indicate that he is tired - for instance - for instance after the Bombay attacks - he indicated that they had received warnings of the attack - but the Taj DID NOTHING about those. And then he says nohting could have prepared them for those attacks - Wrong- they could have been prepared, if they had paid attention to those warnongs which come within 24 12 months after the Bombay train blasts!

Now he admits that the timing of the Jaguar deal may not have been right. I am a fan of Mr Tata, but I fear that age and the years of hardwork have caught up with him. It is the interest of Tata shareholders that Mr Tata should hand over reins to somebody else.

Good no cap on exec pay

Thank God the government has moved away from putting place regulations around capping exec pay. Much as I am an admirer of Obama, I was getting concerned about the focus on executive compensation. Its not the quantum, its how it is paid out - how the incentive mechanisms work, the performance measures in place and the governance mechanisms - that are important.