Mergers as marriages: a financial fairytales

It was another typical end-of-semester afternoon class. Slides and notes lay open, the pages filled with complex theories and formulas for Corporate Finance – teaching this course is like trying to convince a cat to eat broccoli, especially when the students are sleep deprived and their minds are already overloaded with assignments, submissions and final exams are just around the corner. "Class, today we're going to discuss the topic of mergers and acquisitions. Merger is a business deal where two independent companies combine to form a new legal entity. The main motive behind this corporate action is usually the synergy effect…Synergies arise when the value of the merged firm is higher than the pre-merger value of both firms simply added together. For example, if firm A has a value of RM500 million, firm B has a value of RM75 million, and the combined value of the firm is RM625 million, we can say there are RM50 million in synergies for this merger.” I started the lecture while glancing around the classroom. A few heads nodded lazily, but most just stared at me with the same level of interest as a wall. This was my battlefield - a classroom brimming with weary warriors fighting a losing battle against financial fatigue. Taking a moment to gather my thoughts, I took a deep breath. I must not let this situation overwhelm me. It was time to try something different. "Alright, everyone, forget dry formulas! We're not going to discuss finance today. Let’s talk about love and relationships. I want you all to imagine mergers as marriages." Everyone looked up, confused. Were they hearing their Miss right? Was she joking, or was she just overly caffeinated? "Let's see M&A as a grand financial fairytale. Mergers become marriages, companies will be the eager suitors on a quest to find their perfect match, and synergy, the happily ever after we always dream about." At that moment, a wave of curiosity swept across the classroom. One thing was certain - my comrades were wide awake and eager to hear what financial fairy tales awaited them.