Channel 4 CEO David Abraham might contemplate possible acquisitions, but Five won’t be one of them, a leading mergers and acquisitions expert has claimed.
Following reports that Abraham has rejected any immediate plans to merge with Five, Paul J Siegenthaler, a renowned M&A consultant and author of ‘Perfect M&As – The Art of Business Integration (£23.99, Ecademy Press) has labelled Abraham ‘a wise man who might be looking to acquire businesses, but only when the timing is right and if it makes strategic sense to do so. He believes Abraham knows a merger with Five is unlikely to add value to the existing company portfolio.
Siegenthaler says, “As an industry, the whole world of radio and television are going through challenging times, with a need to re-define their strategy, their target audiences, and the way they will convey the content of their programmes to their audience. They need to re-invent themselves, the solution to their current difficulties and uncertainty does not lie in simply reducing their cost base by deriving possible synergies from a merger or acquisition. Size is no guarantee of success and therefore it is difficult to see what Channel 4 would gain from acquiring Five, which would only add to the shopping-list of strategic and organisational issues Abraham needs to address.”
Siegenthaler claims that RTL must be disappointed at Abraham’s lack of macho-ego and appetite for “acquisitions for the sake of acquisitions”. Indeed, Abraham’s wisdom has ended, or certainly postponed, the prospect of disposing of a problem child in RTL’s portfolio.
“Integrating two businesses successfully requires a level of focus and effort which most companies tend to underestimate, hence the high percentage of mergers or acquisitions that fail to create value or even end up destroying shareholder value,” says Siegenthaler. I still think M&A is a fantastic means of achieving a quantum leap in the development of a business, but only when the business case rests on sound reasoning; not for the ego of the CEO, not just to enjoy the thrill of all the media buzz, not to simply become bigger (and more complex), but to create value and gain a durable competitive advantage. All things that David Abraham seems to have understood.”
Siegenthaler adds, “We can be sure that the day David Abraham makes a bid to acquire another company, there will be some real substance in his proposition. That is the sort of M&A I would love to get involved with.”
ENDS
Notes to Editor
Paul J Siegenthaler has helped numerous merging or acquired companies to integrate successfully, and has driven major business transformation programmes across Western Europe and North America, ensuring they deliver the business case shareholders had been promised.
A Swiss national whose family background extends to the UK and Greece, he has lived in five European countries and in the USA, acquiring an acute cross-cultural awareness and a truly international perspective.
Following a Masters degree in Economics from H.E.C. Lausanne and an MBA at London Business School, Paul spent the first 17 years of his career as Managing Director reshaping companies acquired by an international group, before focusing solely on the business integration of broad scale international mergers and acquisitions, in several industries.
Paul is the author of ‘Perfect M&A’s’ (£23.99, Ecademy Press), a book which goes straight to the root causes of most M&A failures, and hones in on the specific elements that senior and middle managers can use or develop to deliver an orderly business integration, a smoother experience for the individuals in the organization, and the realization of the benefits that the initiators of the merger had promised to deliver.
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Tags: Channel 4, Five, M&As, Merges & Acquisitions, Paul J Siegenthaler
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