United and Continental – A Merger of Equals (if you say so)

Monday, May 3rd, 2010

United and Continental announced a merger of equals today. (Of course, this merger would need to be approved by the US Department of Justice.)

The name on the planes would be United, the CEO would come from Continental, and ownership would be 55% United and 45% Continental. (Wall Street Journal 5/3/10)

It all sounds good for owners, but history suggests that there are few mergers of equals. (BTW, seems to me that Chrysler and Daimler Benz was a merger of equals as well.)

I believe the leaders of both companies are probably sincere. But once the decision-making process starts to tamper with sacred routes, the location of various offices, who will get promoted to senior positions, then human nature comes into play. That nature suggests that we want to protect what we think is ours and that’s when Machiavelli enters the garden.

If they were to ask my opinion, I would suggest that a part of their due diligence process be to look at the human impact of the merger. For example: How will we decide on senior promotions? Locations for various departments? Who decides on what routes to open and end? When to build new plane and what planes to build? Whose human resources policies will we adopt? The list goes on.

And then, go a layer deeper and ask yourselves: What will we do when we don’t agree with each other? I know, you will talk it out. That’s fine when it works, but what about when it doesn’t? That’s where it gets interesting.

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