The next big acquisition (Part one)

August 26, 2008, 6:00 PM UTC
Fortune



Labor Day is right around the corner, bringing with it the end of seersucker, the smell of autumn, and the start of the new mental year. I’m sure that many of you are involved right now in strategic planning exercises that scope out the shape of the third and fourth quarters and, more importantly, take a look going forward at what the remainder of the decade might bring.  

In so doing, it is altogether proper, of course, to consider whether one’s corporation is working with the proper mix of assets. Divestitures of non-core holdings are considered, as are strategic acquisitions both friendly and unfriendly. In that latter regard, it is quite clear that friendly transactions are best, yielding true economies of scale, collegial consideration of key integration issues and so forth. Still, unfriendly actions against target companies are sometimes necessary, and those are on the table as well, as we take a look at the challenges and opportunities that lie ahead.

These questions are appropriate not only to business organizations, but also to those meta-corporate structures known as nations, although we might all be better off, globally as well as locally, if the leaders of our national governments were as rigorous and methodical as those in our arena. Too often, governments rampage about willy-nilly doing whatever feels best when party politics, anger, greed or emotions of one kind or another take control of the ruling cadre.  Our governments could, in short, be more businesslike.

This is particularly germane at this moment, as each party nominates the individual it believes would be best-suited to represent the interests of the American people. Is this not an excellent time to take stock of our portfolio of assets and look for ways to divest, invest and grow the base business of our national corporate state? I believe it is. The scent of change is in the air, and in that environment in which fresh ideas are not only welcome but necessary I have a suggestion for a very, very big deal that could solve a lot of our strategic issues and point us in a good direction for many years to come.

I’ll lay out the rationale in the next few days, as well as some suggestions for how it might be accomplished under a number of possible scenarios. In so doing, I will simply be bringing some of the methodologies I have learned over my years in business to some of the issues that face our nation.

The concept is this: When viewed as a business entity, the United States faces many of the same problems endemic to mature organizations. Growth has slowed. Upside is difficult to ascertain given the current asset base. Operating resources are suddenly quite limited. Wages are higher than many competitors. At the same time, opportunities for young people are narrowing. We are increasingly less competitive with start-ups that promise adventure, better benefits, more leisure time, and a stronger currency more likely to grow over time, like Europe, Asia and Dubai. At the same time, make no mistake, our corporate state is strong. With an influx of new blood, new resources, new territory, the powerful established base could be sustained and produce a radical new growth curve.

In short, a major acquisition is called for. Recognizing this, the prior Administration has attempted tuck-in acquisitions that have failed to produce value. Current activities have been non-strategic, far-afield, alienated from our core operations and difficult to manage, to say the least. It is clear to many that these abortive efforts – be they joint ventures or ill-advised mergers of one sort or another – have failed, and must be abandoned. The problems inherent in a static strategy, however, remain. And yet the answer is staring us in the face, I think.

When the United States faced a similar dilemma in the 19th Century, it expanded corporate operations until they reached from one end of the continent to the other. It was, of course, a rough-and-tumble time, not as sophisticated and evolved as ours. The process was ugly, even if it was given a clever brand to hide behind. After all, one man’s Manifest Destiny is another man’s genocide, imperialism and theft of territory. Today, with our contemporary understanding of mergers and acquisitions, product and brand integration and organizational theory, there is no reason why the process could not be done quickly, efficiently and in a highly civilized manner, producing value for all concerned.

This is why I believe the time is right for the United States to acquire Canada.

TOMORROW: Why the deal makes sense for both companies.