And Beyond the Deal warned that mergers between non-related companies face even higher failure prospects. The base message, backed by the facts, has been re-packaged as ‘new´ by someone every few years or so-- and yet the wave of marginal deals continues, depressing company shareholder value while terminating erring CEOs´ careers.

So with such massive evidence against hasty acquisitions in general and marriages of poorly related businesses specifically, why would any CEO persist with deal that is optimistically described as troubled-- such as Hewlett-Packard´s (strength: printers) proposed acquisition of fading Compaq, a leader in the fast-imploding commodity PC business?

Predictably, the acquiring company´s PR explanation is always ‘value´ creation, despite the massive weight of precedent and often Disneyesque financial projections, made even less plausible because of acquirers´ traditionally poor postmerger integration performance. Everyone knows the real reasons for failure to retreat from the faltering deal: (1) massive corporate egos and (2) persuasiveness of bankers and other intermediaries who have a vested interest in ensuring that the marriage proceeds—because they receive no 6-8 figure fees otherwise.

But there´s another important reason as well, what we refer to as the Point of No Return. In the case of Fiorina´s Folly and past value destructive propositions, the CEO finds him/herself in a no-win dilemma. Retreat from the fatally flawed deal, and some in the biz-press shout weakness. Some on the Board see the abandoned deal as a wasteful junket, especially since they had their hopes raised and then received nothing.

‘No win´ is the right description, as both CEO and acquiring company are eventually pulled down by the Dead on Arrival deal. But to the drowning chief executive, the tragedy continues as the transaction proceeds anyway. To the drowning chief exec, the prospect of buying a little time with PR bluff about the ‘marriage made in heaven´ buys a little time. Nothing more.
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