Donkey + Donkey = Horse?

In my days as a private equity investor, I learned some interesting lessons about ‘synergies’, horses, and donkeys — here they are 🙂

Every fund has the usual mix of investments, some good, others not so much. Most investments that do badly, do so for deep underlying reasons. Without addressing them, there is no point just jumping around with your tail on fire.

Yet, the lure of ‘doing something’ is really strong.

Hence, every other day somebody comes up with a proposal to do a ‘strategic merger’ between laggard A (your company) with laggard B (another hapless company). Or something similar to keep everyone busy instead of solving the real problem.

Most of these discussions, some outright harebrained, thankfully go nowhere.

Tying up two donkeys doesn’t make a horse. Yet, in the corporate world, the effort to fix deep problems by combining two companies never stops. Why?

Because, to acknowledge real problems, you need to understand things deeply. Further, you have to be willing to say the three hardest words for any human being – ‘I was wrong.’

Without humility, honesty, and deep thinking, the same person who created the problem also can’t be the one solving it.

Once again — two donkeys don’t make a horse. And they never will.

– Rajan

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