[CEO of Delta Air Lines Gerald] Grinstein is just the latest executive who, faced with an unsolicited offer, seems to be speaking out of both sides of his mouth. Too often, executives seeking to fend off unwanted takeovers make claims that end up looking foolish in hindsight. In their desperate attempt to ward off bidders, executives make every excuse in the book, but rarely say what they really mean: Show me the money.
Truth, it would seem, is the first casualty in a takeover battle.
Umm, yeah, that sounds about right.
Now, before you go and join Mr. Sorkin in getting all of a lather, Dear Reader, it would behoove you to remember that all external communications made in the course of contested M&A situations are only a fragmentary record of true events and a necessarily limited one. When a deal goes hostile, the lawyers take over driving the bus, and they impose strict limitations on what a CEO or any other executive is allowed to say in public. They look to the potential implications of all statements in the light of potential future (or current) court action, so CEO communications necessarily appear stilted and strangled.
On the other hand, we must realize that a hostile takeover is always a negotiation in some form or another, always with many more than two interested parties involved. No one likes to negotiate in public, and you cannot negotiate effectively in any context if you are transmitting full and transparent information to the other side(s). Hence, we see shadings of truth, selective emphasis, omission of key information, and misdirection ("lies," in the common parlance) in even the most anodyne of negotiations, much less in the high stakes poker game of hostile M&A.
This is not necessarily a bad thing. Stakeholders of every stripe—employees, shareholders, etc.—should demand that their executive management play the game sharp and hard, in order to satisfy their heightened fiduciary duties. If that means that the executive in question comes off sounding like an oaf, or a shifty rascal, that's just too bad for him or her: it comes with the territory and, we might add, the paycheck.
Of course, neither of these points justifies outright fraud or “excessive” lies. My point, however, is that the context and development of a hostile takeover means that the only final arbiter of what constitutes “excessive” will necessarily be a judge or jury in a court of law.
The court of public opinion, led by the commentariat like Mr. Sorkin, will render its own verdict. As you see.
© 2007 The Epicurean Dealmaker. All rights reserved.
