Niccolò Machiavelli, commonly known for the famous “It is better to be feared, than loved”, is a complex historical figure whose contribution to politics, at least among armchair intellectuals, is often reduced to clichés. For example, his famous advice to a young prince on Cruelty or Mercy, is in fact not as unambiguously cruel as one often hears it being paraphrased. If you read The Prince [1], in Chapter 17 you will find Machiavelli quite eloquently writing:
… this raises the question on whether it is better to be feared or loved. The answer is, that one would like to be both; but, since it is difficult to combine the two, it is much safer to be feared than to be loved, if you have to choose.
I try to read all the books I find deeply interesting at least twice. I have first read The Prince many years ago, and only recently got around to reading it again. Maybe it was the timing, but as I was reading through the first chapters one thing that caught my attention was how applicable his advice to a young prince, was to a CEO that has just acquired a company.
Some context: The company I work for acquired another company, and we were lucky enough to retain their team. The integration of our technologies and products has been somewhat fruitful, but it took too long, and involved quite some friction. In retrospect, I realize we did not do any of what Machiavelli advises.
Mergers and Acquisitions are often painful, especially if it’s more of an acquisition than it is a merger, and it almost always is, because one party typically has more negotiating power than the other. Then there are differences in culture, the us vs them mindset, resistance to change, the not invented here syndrome, and many other feelings that I assume originate from humans’ innate desire to associate one’s identity with that of a group. In Machiavelli’s terms, these two companies would be provinces of different languages and customs. When discussing Mixed Principalities he writes:
When a conqueror acquires states in a province which is different from his own language, customs and institutions, great difficulties arise and excellent fortune and great skills are needed to retain them [the provinces].
There is certainly a lot of nuance in the matter, but you’re smart, you get that. Anyway, should you ever be in a position of acquiring or merging with another company, here you go – Machiavelli’s advice on mergers and acquisitions:
Ruin them
If all you need is assets that have already been generated, keep only the assets, get rid of the rest.
When ruining them is not an option
The more realistic scenario is that you cannot ruin the newly acquired partner. Here are three strategies if that’s the case:
1
One of the quickest and most effective expedients for this purpose would be for the conqueror to go and live there by himself.
As a leader, if you are on the spot, you can see the beginnings of trouble and take the necessary steps at once; but if you are not there you hear of difficulties only when they’re too big to be dealt with. By being present, the employees of the acquired company will be happy to have direct access to the leader. It also makes it hard for any of your representatives to mess things up.
Should 1 not be possible:
2
…plant colonies at one or two points. which will serve as shackles to the territory
Send over your own employees, but not as managers. Fill in the lower ranks. They will be more loyal to you than anyone else. They will make sure you are adequately informed at all times while weakening the us vs them mentality that could otherwise prevail. This is cheap and effective. Sending over directors and managers is both expensive and dangerous, as it can have the opposite effect; they have less of an incentive to be honest (more at stake if they don’t succeed), and they can further fuel the us vs them mentality.
3
allow them to live under their own laws, while exacting tribute from them and setting up an oligarchy
Let them do what they used to, and limit the arrangement to simply getting out something out of the deal while not getting involved in their operations. The second part of the advice is interesting. Set up an oligarchy - that is rotate / create some managers who could have not otherwise been in that position. They will know that they are there because of you and will do all they can to guard your interests by virtue of caring about theirs.
Reality is very complex and morality somewhat subjective. Take the advice with some grain of salt. Here’s my favourite quote from Machiavelli:
How we live is so different from how we ought to live that he who studies what ought to be done rather than what is done will learn the way to his downfall rather than to his preservation – N. Machiavelli
Free ebook from Project Gutenberg - The Prince ↩︎