O Canada!(5) Strategies
Thursday, Jun. 14, 2012 at 12:00pm
As we move beyond considering history to making it, I would like to thank all those who have written in with their comments, suggestions, quasi-serious jokes and trenchant observations. This strategic plan could not have moved to this stage without you.
Now then: Potential means of getting this transaction accomplished are various:
1. Friendly joint venture on synergistic operations. Attractive but limited in value. In such deals, each side keeps its brand, its independence, and its treasured access to key customers and businesses. Very little upside for the acquisitor and too much for the target.
2. Reverse takeover of U.S. corporation by Canada, Inc. Several of you have suggested this. It has its points. But the concept is ultimately unstable. We have a perfect example of such a maneuver: the Time-Warner/AOL merger. In that, a deluded CEO decided, in a so-smart-he's-stupid move, to allow his gigantic corporate government to be taken over by a smaller and less mature entity. In practice, it was like having a bunch of scruffy Visigoths taking over Rome, which didn't work very well the first time either.
3. Friendly merger of equals. Better, but still not perfect. A merger of equals is basically a polite term for an acquisition of one party by another in which the target retains much of its original structure. It would involve significant payment up front by the corporation, plus significant incentives to the target's senior management to remain in place, at least during an attenuated transition period. Integration issues would abound, and much of the existing, unnecessary infrastructure would have to be retained for an unacceptable amount of time. Friendly, merged entities give mergers and acquisitions a bad name, and the reputation for a high rate of failure that they enjoy.
4. Straight transaction. The 1971 suggestion that U.S. Corp simply buy out every Canadian citizen is amusing on its face, and would cost somewhat more now than it would have at that time, but it would guarantee a happy, affluent employee base in the newly unified entity. Such a buyout would create issues, however, with existing employees of the corporation, who, having joined from birth, essentially, would suddenly be thrust into the role of second-class citizens without the huge nest egg enjoyed by the acquired populace up North. Such resentments are difficult to manage. On the upside, a direct purchase of Canada from either its citizens or the United Kingdom, which reportedly has something to do with them, would ensure a free hand for those seeking to administer the transition and the shape of the new enterprise. Simple, clean, quick-- and very expensive.
5. Hostile takeover. Leverage their assets. Purchase them with the debt created by the deal itself. Enforce the new arrangement with force, if necessary. The reality is that the target cannot really claim the ability to defend itself. There would be minimal loss of life. The property, operations and employee base would be acquired. The small and rather limp national management structure would be phased out immediately. We could even offer attractive exit packages to those who wish to depart. After the dust settles, most would have stayed, and a plan for zero-based operations could be swiftly developed and executed. Marketing efforts could be implemented to develop new branding, flag, anthems, etc., for the entity. A new currency would be called for, which would be quite simple, exchange rates now being equal. Think of the excitement! The creativity that would be called for! The opportunities for growth and the development of new horizons!
Obviously, further study is necessary. Plans for this strategic initiative have been in development now for more than 200 years. It should not, however, take another 200 to get them field stripped and ready to go.