Even without visits from CEOs, the professor says, Chicago's program does offer some views of how deals are really done outside the ivy-covered walls: the often dysfunctional pictures painted by the participants themselves. "It's often a world of hubris and empire-building," according to Leftwich. "They're told that companies have to grow by 20 percent a year, and the only way they can is through acquisitions." And occasionally, the misguided path to that growth is "the reverse engineering of the price they've decided to pay." A case Chicago uses, the battle for Paramount that Viacom won over QVC, presents such an example, with the bidding companies altering their calculations to reflect the incremental rise in bids, the professor says. This helps him illustrate for participants "the minefield of M&A."
Spinach at Tax Time
The Chicago-style separation of finance and strategy is anathema elsewhere, including at the University of Virginia's Darden School. Using what Darden professor Jay Bourgeois calls "a marble-cake model," compared with others' "layer cake" approaches, the school has its faculty study what others in its program are doing, and lets their presentations intermingle. "Every one of my finance colleagues speaks the strategy language, and vice versa. And if one person is structuring a deal with tax angles and collars for the class, I keep up with what they're doing," says Bourgeois, a business administration professor who describes the study of tax considerations as "the spinach in the program."
Like other schools teaching M&A to executives, Darden believes one week is the maximum companies will accept for a single course. But in a break from tradition, Darden has created a separate four-day "Postmerger Integration" course for this fall. The new program, says Bourgeois, who will teach in both, evolved because graduates wanted more answers about "what's next" after taking the regular merger week. "We finally put together a program focusing on such things as differing cultures, behavioral issues, and the mechanical parts of combining firms, such as blending payroll, IT systems, and accounting systems."
The professor expects the postmerger course to be tough. "Where's the fun in M&A? It's doing the deal," he says. "Integrating is hard work, and there's often no glory from successful integrations." To engage participants, he'll introduce role-playing, including "CEOs and CFOs" from the class announcing the deal to analysts. He expects a third of its attendees to come from the earlier Darden class.
The distinguishing characteristic of "Mastering Acquisitions" at Duke's Fuqua School is an emphasis on merger alternatives — especially strategic alliances. Alliances, says Prof. Arie Lewin, are "a structure by which you can experiment and taste the possibilities" before jumping in. Another watchword of the Duke program: think small. "If you are out to acquire capabilities or technologies that are new to you, you probably don't want to do that by acquiring a large company," says Lewin. For companies less concerned about the merger-versus-alliance alternative — or unable to break executives away for a week — Duke also offers a two-day program.
Indeed, the trend toward shorter programs is strong at some schools. The University of Michigan holds its program to just over three days, giving only brief negotiations training and concentrating valuation into an intensive half day. Its object: to stress strategic and cultural elements over finance elements, even though — and perhaps because — an unusually high 80 percent of its attendees are from the finance side of their companies. "Our view is that too much time is spent on the finance piece" in most merger classes, says finance professor Anjan Thakor, who heads the Michigan program. His class opens with a strategy discussion, for example. "If you start out with the numbers," he says, "they focus on the numbers."
The Maligned "Chainsaw"
Harvard Business School, opting for a similar three-day schedule, applies its characteristic case-driven format to a course entitled "Corporate Restructuring, Mergers, and Acquisitions: Creating Value in Turbulent Times." The name represents a bit of marketing designed to appeal to the corporate interest in merger education, suggests Prof. Stuart Gilson, whose course considers M&A as a part of the restructuring "whole." (The similar MBA course leaves M&A out of the title completely.) "I call it restructuring, but most folks would call it M&A," says Gilson.
Some of his cases take a valuable long view that brings the deal-making and restructuring elements together in the same analysis. One case is that of Scott Paper, which Harvard examines through the Al Dunlap years of the mid-'90s, on through its acquisition by Kimberly-Clark in 1995. The executives who attend his course get a somewhat contrarian perspective. The work at Scott by the man nicknamed "Chainsaw Al" was "one of the most maligned and misunderstood of restructurings," says the professor, who organizes all financial projects into three stages: design, implementation, and marketing. The last is "a much-neglected, but very important, stage, because the roadside is littered with mergers that Wall Street simply hasn't bought."
Columbia professor Enrique Arzac knows that by limiting his course to three days, "you cannot make room for everything," so he has chosen to build it around premerger activities, and in particular the need for attention to due diligence in all elements of the acquisition. "We don't have a separate session we call 'Due Diligence,'" he says. "All the professors focus on it." What's lost, he says, is negotiation work and postmerger analysis. For this expertise, executives are steered to separate classes at Columbia.
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