Opinion Poll: Anthem Takeover Suffering from Deal Heat?

*Note: The following was originally posted as an article on LinkedIn dated June 20, 2015.

Earlier today the Wall Street Journal reported that Anthem has submitted yet another, even sweeter deal to acquire fellow industry behemoth Cigna. The deal is now valued at $184 a share. This the fourth Anthem attempt in just weeks, the moves viewed as prescient at a time when M&A chatter abounds, and in a sector ripe for sea change with many heavy hitters stepping-up to the plate.

The first question which comes to mind is whether Anthem remains prudent in a tumultuous environment, or if this mega merger is beginning to suffer from deal heat. First to explore intent, as we must understand the game. Eccles, Lanes, and Wilson writing for the Harvard Business Review remind us that, “In today’s market, the purchase price of an acquisition will nearly always be higher than the intrinsic value of the target company. An acquirer needs to be sure that there are enough cost savings and revenue generators—synergy value—to justify the premium so that the target company’s shareholders don’t get all the value the deal creates.”

So then why consider deal heat? Well, according to Jack Welch’s description of deal heat in his seminal text Winning, “In such situations, once an acquisition candidate is identified, the top people at the acquirer and their salivating investment bankers join together in a frenzy of panic, overreaching, and paranoia, which intensifies with every additional would-be acquirer on the scene.” He goes on to list seven pitfalls associated with mergers, including a warning about the sixth pitfall, paying too much. Described by Welch as “Not 5 or 10 percent too much, but so much that the premium can never be recouped in the integration.”

So… $184 a share when Cigna is listed at $156.40 at the time of this writing I ask you … is this still prudent, or is this deal starting to get a temperature? Please share your opinions and comments below, and be sure to share this article with others to give them the chance to weigh-in.

Dr. Justin Barclay is an operations research scientist focused on supporting strategy through applied research and analytics. He is a senior analyst specializing in research and data modeling for the well-being company Healthways, and serves as an assistant professor of strategy for the Jack Welch Management Institute.


Speak Less, Say More, To Keep Your Strategy On-Track

Microphones at the podium

This did not begin well. For the past two months I have been teaching a group of senior executives and high level technical professionals the finer points of communicating strategy to their organizations. Day 1 was a travesty, I was all but drawn and quartered by their perfunctory comments relative to impressions of how confusing it was that I assumed their having a strategy did not necessarily equal their having an ability to communicate that strategy.

To some extent they were right, yet to a larger extent we all still had quite a lot to learn. While I’ve been teaching college students for the better part of the last 12 years, I still went home that first night of this class just weeks ago entirely deflated. While confident in my ability to both recall and relate the material, I had a larger lesson to learn about the inauthentic way in which I arrived that first night. This was not a class of first year freshman looking for strong leadership. These are seasoned leaders themselves and in their last class prior to graduating with a Master’s degree in, of all things, leadership.

So what did I do differently to turn things around? I stopped trying to talk my way out of it. Instead, I just recognized my role as they did, a bridge between theory and practice yet nothing more. I created the boundaries for their communication and learning and set them free within those boundaries. My communication with them has also since changed. I toned down the sage on the stage. I listened more intently. I adjusted both style and content on the fly. I adjusted my approach to leverage their experience and my own, all while tying in the content when I could through substantive yet bite-sized key takeaways to keep it memorable. In the process I realized that as I was teaching them to become more effective communicators, such that they may communicate their strategies more effectively, I too was learning to be more effective with my own communication. This in mind, I just wanted to take a minute to share a dozen of my key takeaways from this class on communicating strategy, that I think you may just find helpful across communication applications of all types.

  1. Effective Leaders Lead Strategy and Tactics
  2. Lead with Logic & Emotion, Not Logic or Emotion
  3. Everyone Can Be a Change Agent
  4. Effective Alignment Requires A Common Message
  5. Keep the Strategy Message Bite-Sized & Repeatable
  6. Reach Them Through Intrinsic Motivations
  7. Identify Motivations Through Open Discussion
  8. Connect Strategy to a Destination
  9. Measure the Business to Measure the Communication
  10. Always Reward Those Supporting the Strategy
  11. Expect of Yourself What You Expect of Others
  12. Your People Are Your Primary Communication Vehicle

You may entirely disagree with some of what is listed and that is certainly for you to decide. There may be some (or many) which you find context-specific and are of no use to you. Yet I still believe knowing what content matters and what does not is one of our first steps toward great communicating as a leader, so thank you for reading.