October 05, 2009
Gods at War, by Steven Davidoff
Posted by David Zaring

My co-author and deal professor par excellence Steven Davidoff is out with his first book this week.  Gods at War is about the transformation (continuation?) of dealmaking into something quite personality driven, with troublesome results.  But, in being an account of the latest boom and bust in M&A, it is about much more than that, with meaty takes on the material adverse change clause, the fall of private equity, and, not least, the importation of the deal perspective into the financial crisis. 


As Steve observes:

The personality-driven model of deal-making has persisted, driven by the individuals who make the decision to buy rather than sell. In the first year of the financial crisis, this was on display as Treasury Secretary Henry J. Paulson Jr. turned into the market arbiter. During this time, it was Paulson who apparently decided which companies died and which lived and were acquired or bailed out. His choices dictated that Bear, Stearns & Co. should live but left Lehman Brothers to fall into bankruptcy. In the process, Paulson demanded, at least initially, that government-facilitated takeovers be structured in a manner that punished shareholders but did not specifically target officers or directors. Secretary Paulson, a veteran deal-maker and ex-C.E.O. of the Goldman Sachs Group Inc., may have been bowing to political and legal reality in his decision-making. But his approach aligned with his deal-making experience: The bailout can be viewed as a series of deals where the shareholders bore the costs over management. Failing to ignore the personality element in deals and deal-making is to ignore one of its central determinants. But if deal-making is to truly succeed, this personal element must be restrained. Modern deal-making is often a fight to restrain this element for more rational, economic decision making.

Highly recommended, and there's much more here.  I've seen the book in previews, my published copy is already on its way.  Indeed, I'd say that it's your top holiday choice.  At least, it certainly is one of them, but there are other candidates too, more about them to come.

While I'm at it, you should be looking at the DealBook crisis conference, in which Steve and I will be participating, along with luminaries like Gary Gorton, Lucian Bebchuk, Leo Strine, David Skeel, Lynn Stout, and a host of other luminaries.

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