Muffie Benson-Perella (muffie AT dealbreaker.com) is an Associate in the Investment Banking Division of a "Bulge Bracket" bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. Her regular column "Heard in the Suite" is a probing (and, ahem, fictional) weekly look into the secret lives and behind the velvet curtains of the investment banking world.
"Mergers with Muffie" will be a recurring feature where I review the often amorphous and unfastidious world of mergers and acquisitions and review proposed, pending or completed transactions.
It wasn't too long ago that the merger rumors were flying around about Apple and Disney. Just after the Pixar sale Steve Jobs was the largest individual shareholder of Disney. That was only one of several reasons an Apple Disney deal made sense. For instance:
Apple is very strong in the educational and artistic markets. Perfect for Disney synergies.
Digital media dominance, also Apple's to lose. Again, good dovetail with Disney, fading in the sector.
And, let's face it, Jobs has quite the ego. Disney, again, perfect match.
Lots of things make it sound tempting. But I am here to tell you that it will never work.
First of all, the cultures will clash immediately. All you have to do is look at Apple's headquarters in Cupertino and Disney's facility and you can immediately see it's just not going to happen. I shouldn't need to remind any of my readers how important culture is to the success of a merger.
Left, Disney; Right, Apple. Nope.
Let's not forget that the corporate headquarters is a central reflection of a firm's cultural identity. It is the touchpoint the firm has with the rest of the world. Millions of dollars are spent developing, designing and erecting these buildings. The concept of space and workplace say more about a firm than does its balance sheet, in many instances.
No, I think the clear match for Apple is far simpler. So simple, in fact, that it's been overlooked for years by the "financial wizards" in the industry, none of which have any original thought to speak of. There is only one good match for Apple: Microsoft.
First of all the cultural similarities couldn't be more similar. Steve Jobs and Bill Gates, for all the rhetoric otherwise, are really quite compatible. Their backgrounds are similar, their business is similar, their West Coast roots are similar. They understand each other, and, in fact, the competition between them is entirely artificial. They should be working together and I suspect that they actually know it. I think they would actually make fine Co-CEOs. It's been done before, with Time-Warner and Cigna, for example.
Going back to my earlier analysis it's glaringly obvious. Their headquarters even look very much alike.
Left, Microsoft; Right, Apple. Yep!
I understand that the concept isn't intuitive to everyone. I understand that certain long held biases will make it a difficult transaction to accept. Still, all you have to do is have some imagination. Just look at some of the recent deals putting two totally different firms like Whirlpool and Maytag together (to name just one recent matching) to see that entirely misguided and unsynergistic mergers are getting closed with barely a hiccup and Apple-Microsoft starts to look better and better.