This was the first line of the press release—”Publicis and Omnicom agree to terminate proposed merger of equals.” Big news if you care about the advertising industry. But even for those who could give a flip about the ad business, there’s that “merger of equals” thing to think about.
The term sounds like an enlightened modern marriage. And in fact, when Publicis Chairman Maurice Levy and Omnicom CEO John Wren first announced their “engagement” last summer, there were flowers, adoring looks, and the arc de triumph in the background.
Publicis Chief Executive Maurice Lévy, left, and Omnicom CEO John Wren at a news conference announcing the merger in July. (Via Bloomberg News and the Wall Street Journal)
“They looked like best friends,” says Larry Chiagouris, professor of marketing at Pace University’s Lubin School of Business in New York. It was like a portrait for a wedding announcement. “Big smiles. Great scenery in the back.”
The ideals driving a “merger of equals” really are noble, says Lawrence Hrebiniak, emiritus professor at the University of Pennsylvania’s Wharton School of Business. The conversation between CEOs who want to embark upon one usually goes something like this, he says:
“We’re both competent, we’re both good, we’re both capable, so let’s, like adults, get together and decide how best to run this new large company that benefits from both of our sets of skills and capabilities.”
But you can probably guess how this romance usually ends. “How do I put this,” says Hrebeniak. “There’s no such thing as a merger of equals.”
Instead well-intentioned attempts often turn into a clash of cultures and battle for control. Our financial person’s better than yours. Our marketing head is more aggressive than yours. “You have divisions, you have politics, people pushing for one person or another to lead the show,” Hrebeniak says.
The only successful merger of equals that Sri Zaheer, dean of the Carlson School of Management at the University of Minnesota, can think of wasn’t technically a merger of equals at all. And that helped, she says. “People don’t start feeling that everything has to be absolutely split down the middle.”
That was back in 1998, when Norwest bank acquired Wells Fargo, and took its name.
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