Yesterday morning I was told a story by a friend/coworker. He had traveled to the east coast and met a man from Texas who, as it turns out, was a Democrat. Ann Richards, former Democratic governor of Texas, came up in conversation and it turns out this guy from Texas knew her. Or, at least, had been introduced a couple of times.
As it turns out, and I know this will shock you, a politician of her stature meets a lot of people. Let me amend that. A lot. I'm sure she had a great memory, but obviously she couldn't remember the name of every person she met.
Well, she might not have remembered names, but she remembered people. And when she was reintroduced to this guy (a couple of reintroductions, it seems) she had the same schtick down:
Ann Richards: How are you?
Non-Ann Richards Person: [insert any response here]
Ann Richards: You're great!
Now, I don't begrudge her having a standard spiel. Whether it's 99% genuine or 1% genuine (maybe she really does think that everyone she's met previously is "great"), it's a response that makes her happy and probably is better than the alternative of acting oblivious/apathetic to previous encounters.
The reason I mention all of this (other than my joy in blogging about dead chicks) is that last night in class I had a similar vibe coming from the prof. This instructor is someone who's sensitive to over-lecturing and so tries to get the class really involved. Especially the last half of the class, when we were discussing case studies we'd read (shockingly, unlike every week in every class, none of them were on Wal-Mart or Dell or Southwest this week... I am undergoing withdrawals right now)
There are some bright people in my class... there are probably some dim ones, too, but the dim ones are at least smart enough to hide it reasonably well. Even in a group of bright people, however, some questions or comments are going to be dumb. No offense to anyone, of course, in saying that. Even I made a dumb comment in 2005 after a similar gaffe in 1998.
Interestingly, though, the professor thinks that every comment is great. Every question is fantastic. Every point is incredible.
She says it with sincerity... or at least well-faked sincerity. Which is the same thing, right?
After six weeks of this (well... four weeks, given my skipping of two classes) I'd become inured to it and it didn't really seem like much of a much. Something changed my mind, though, and triggered the Ann Richards connection and this blog entry.
She was lecturing, with a PowerPoint presentation, about mergers and acquisitions. We were talking about synergy and when a merger or acquisition made sense. The statement she had on the slide (and which I took issue with) was something like this:
"An acquisition should only be made if the combined value of the companies is greater than the value of the companies individually."
At the time of purchase, this is almost impossible, since a premium has to be paid for the acquired company. Over time, though, I don't think this statement is at all true, and I raised my hand to tell her my opinion.
Unfortunately, I didn't do a good job of explaining. She told me I had an excellent point, but I knew she didn't really understand what I meant. I wanted her to understand so she could correct my thinking or admit that her slide was wrong. I thought if I took the time to explain it--to demonstrate it in a hypothetical--she would understand and give me something other than the "excellent point" reply.
So I did the unthinkable. Class was dismissed, and everyone was filing out. I approached the teacher, with a piece of paper and a hypothetical involving two companies.
Company A is worth $200b. Company B is worth $40b. Company A acquires B for $45b (paying a $5b premium). A day after the purchase A is worth $195b and B is worth zero. A year after the purchase, A is worth $250b (making this up to make the point) and B is still worth zero. So the net value of the two companies is $250b.
Now... in a world where the acquisition was not made, a day later A is worth $200b and B is worth $40b. A year later the companies are worth $225b and $40b, respectively.
Note that in the second case, the net value is $265b. From society's perspective, the merger eroded value. But from Company A's perspective, it was better off for having made the purchase.
Going back to the prof's slide, it stated that the value of the combined entity had to be greater than that of the companies separately. In my hypothetical, I feel I had disproved that statement.
She commented that it was a best-case scenario, and I said that may be the case, but that the acquiring company should look to its own growth and not rely on holistic opportunity costs for society.
Her response? "You're great."
Oh, wait. No; "Excellent point."
*sigh*
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