Two radically contrasting books look at the world of mergers and acquisitions - highly timely as the wealth management industry experiences plenty of M&A action of its own.

Maybe it was just coincidence but it was hard not to smile when two sharply contrasting books about mergers and acquisitions came in the mail a few weeks ago. And they arrived just as I was writing about yet another wealth management M&A deal, in this case the decision by Credit Suisse to sell its German banking arm to ABN AMRO. (Credit Suisse has been a busy bank in this regard in 2013.)

There has been plenty of M&A in the wealth space over the past year or so, and not just among the larger institutions: Credit Suisse selling Clariden Leu (Europe), Julius Baer buying the non-US wealth arm of Merrill Lynch, etc. There remain rumours, fairly widely circulated, that Societe Generale wants to sell its Asia private banking arm; Italy’s Generali has put the Swiss-headquartered BSI bank up for sale. Quilter and Cheviot in the UK have joined up; plenty of smaller-scale wealth boutiques were snaffled up by aggregators as regulatory cost pressures have intensified. All in all, there’s been plenty of M&A about. But in the back of the mind is the nagging question: who really benefits from all this? And what of the actual clients?

There are plenty of studies, such as from the likes of consultants Bain & Co, saying that most M&A destroys more value than it creates and, further, that many mergers and acquisitions end in divorce and tears, with only advisors and lawyers making much out of it. Am I being a typical cynical journalist? It appears not. And judging by the two books I received, there is plenty of anecdotal and statistical evidence to suggest that far too many M&A deals are driven by wishful thinking.

The books couldn’t be more different. In the sober, analytical corner of the ring is Masterminding The Deal: Breakthroughs In M&A Strategy & Analysis, by Roger W Mills and Peter Clark. Clark is a management consultant and senior teaching fellow at University College London. Mills is an advisor to banks, firms and investors, as well as a professor at the UK’s Henley Business School. This is a book for number crunchers, for the analyst, for the business school student and financial officer.

There are patches of colour to leaven the bread a little, such as Chapter 1 and “The Next Merger Boom Is Already Here”. There are plenty of statistics to flesh out the points; at the back there is, much to this writer’s relief, a handy glossary of all the terms. In reading this 334-page book, the student will learn quite a lot about when to avoid getting involved in mergers at all. One of the key terms in the whole book is acquisition purchase premium, or APP: This refers to the amount paid for a target firm in excess of that firm’s indicated market value (market cap) measured on the difference between the share price of the target at bid and a share price 40 or more days prior to the initial expression of interest. If you are a serious student of M&A, and you want to avoid falling into pitfalls and damaging, rather than benefiting, your business, then this book is for you. It is, in fact, pretty easy reading in some ways. The authors realise that analytical doesn’t have to be dull. It is not bed-time reading, though.

In the jazzy corner of the ring, by contrast, is a book that really is about entertainment, albeit with a few morality tales along the way. Anyone who has read Liar’s Poker or Barbarians at The Gate, and, perhaps, watched the Oliver Stone movie Wall Street will be interested in a book with the arresting title (and people are actually arrested in this book), A Giant Cow-Tipping By Savages. The book is by John Weir Close, a former writer for the Wall Street Journal and Financial Times, as well as founder of The M&A Journal. Where the Mills and Clark book is measured and dry, he is salty and breathless. A whole cast of larger-than-life characters, often coarse, rude, highly driven and ferociously clever, compete for space in a book that celebrates eccentricity. And at times, the impression given is that the reason people did M&A was for kicks.

This book features characters such as legendary (or infamous, depending on your view) buyout operator Carl Icahn; the late Jimmy Goldsmith; advisors and operators such as Marty Lipton and Bill Ackman. The author is unafraid to tread into the political and ethnic minefield of noting that many of these characters come from America’s Jewish community. In some ways, Close’s book seeks to portray this collection of characters as people pushing against the old, WASP-dominated business establishment. The book strikes quite an affectionate tone – Close comes to describe, not mock, these men and even celebrate their brashness, courage, and creativity. It is, however, a delicate balancing act to get right. Early on in the book I got a bit queasy about sentences such as this (page 7): “Yet again, as happened so often in their history, the Jews somehow found their own methods to carry them past such barriers. They became expert in taking over companies against the will of their existing executives. The white-shoe law firms and elite investment banks found this simultaneously distasteful and tantalising as medieval burghers viewed the lending of money at interest.” The author mostly avoids any hint of ethnic stereotypes, however, which is to his credit.  

Can I recommend this book? Well, during a recent spell of court jury service, when I was waiting to be called to a case, I took this book with me to pass some of the time and I read all 296 pages of it pretty rapidly. If I have a criticism it is that there are so many details blown together in this book, with such a gallery of characters and terms that I found it exhausting to keep up with it all. And at the end of it, I am not sure what I learned other than a lot of M&A is about ego; greed, over-confidence and that some of the deals (think Time Warner-AOL) were examples of madness.

I am not sure if any of the wealth management M&A dramas of recent months will create the kind of excitements that go into Close’s book, which, as far as readers of this publication and its sister news services are concerned, is just as well. If there is one take-home point from both books, it is that if M&A does not produce long-term gains for manager and client, best not to enter the game in the first place.