$962M Merger Completed in 11 Days: How Did Shearson Do It?

On Monday, November 23, 1987, Robert Rittereiser from E.F. Hutton called Peter A. Cohen of Shearson Lehman Brothers, rekindling merger talks they had a year ago. Within 11 days from that phone call, on December 4, the merger was sealed, with Shearson agreeing to acquire Hutton for approximately $962 million. The deal was not only monumental in size, but the speed at which it was completed was also unprecedented.

So, what contributed to such a mind-blowing success in such a high-stakes merger?

1. Substantial Preliminary Groundwork

Prior to this round of negotiations with Hutton, Shearson had likely conducted significant financial due diligence based on discussions from the previous year. They would have performed a thorough evaluation of Hutton’s financial health and assessed the strategic value of the merger for their business post-merger. Additionally, Shearson probably engaged in extensive scenario planning, considering various outcomes, including the best-case and worst-case scenarios, as well as the levels of risk and the price range they were willing to accept. This preparation allowed Shearson to quickly adapt to Hutton’s shifting expectations and market conditions, enabling them to make swift, decisive decisions that sped up the process and effectively secured the deal.

Takeaway

In mergers and acquisitions (M&A), speed is not merely about rushing through processes. It's about being so well-prepared that decisive action can be taken promptly when called for. The Shearson-Hutton merger exemplifies how prior preparation enables parties to navigate negotiations swiftly, turning what could have been months or even years of protracted discussions into just a few effective days.

2. Decisive Leadership Empowered by Expert Support

Leadership on both sides demonstrated exceptional decisiveness, likely bolstered by strong advisory teams. The extensive groundwork prepared by these advisors probably enhanced their confidence in making pivotal decisions. Hutton was supported by not just one, but two heavyweight advisors - Salomon Brothers and Blackstone. Similarly, Shearson likely relied on its own advisors and/or an internal M&A/deal team.

Takeaway

Strong leadership, when combined with expert advisory and support, is crucial in driving successful outcomes in high-stakes negotiations. The right support empowers leaders to make informed and timely decisions that can significantly influence the speed and success of mergers and acquisitions.

3. Mutual Motivation

Both Shearson and Hutton had compelling reasons to expedite the merger. Hutton, recovering from a damaging check-kiting scandal, was in dire need of stability and a robust partner to help restore its credibility. Meanwhile, Shearson was driven by the strategic advantages of the acquisition, including significant expansion of its assets and customer base. This shared urgency not only facilitated a concentrated effort but also accelerated the negotiation process.

Takeaway

When both parties are driven by strong, aligned incentives, negotiations can proceed more swiftly and effectively. A clear mutual motivation helps streamline the path to agreement, demonstrating that urgency can be a powerful catalyst in achieving timely resolutions in high-stakes negotiations.

Conclusion

The Shearson-Hutton merger serves as a textbook example of how detailed preparation, decisive leadership, and mutual motivation are pivotal in the realm of high-stakes mergers and acquisitions. These critical elements, when skilfully managed and executed, can lead to rapid and successful deals, dramatically shortening the typical negotiation timeline. This case underscores the importance of readiness and strategic foresight, proving that with the right approach, even the most complex transactions can be concluded swiftly and effectively.

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About Zenify Investments

Zenify Investments is a boutique buy-side M&A advisory firm specialising in the $1M–$50M SME acquisition market. Based in Sydney, we advise CEOs, boards, investors, and growth-focused owners who use acquisitions not just to grow - but to build businesses that are stronger, more defensible, and more valuable over time. Our work spans the full M&A lifecycle - from target sourcing and market intelligence to valuation, risk assessment, and deal completion.

With Zenify, you get Speed in Execution, Clarity in Risk, and Conviction in Value. Reach out to discuss how we can support your next acquisition - and help you buy like the future depends on it.

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