Douglas Carswell's Blog

Sell when they speak of synergies

As a good rule of thumb, when an investor hears a business leader talk of “synergies”, he should look to sell. 

Synergies isn’t merely an ugly term. It is the sort of phrase bandied about by people who don’t really know what they’re talking about, but who have built a career in corporate boardrooms looking as if they do. It is the sort of phrase I imagine one would hear on the lips of those who, in Ayn Rand’s memorable phrase, “ through the decades of their careers, had relied for their security on keeping their faces blank, their words inconclusive and their clothes impeccable”.

Synergies was the justification for the $160 Billion Time Warner / AOL takeover – today cited by some as being one of the most ill-judged corporate blunders in history. It’s the sort of cliché I remember reading in endless IPO documents at the time of the dot com boom. 

How apt, therefore, that EU commission officials should justify giving themselves more powers on the basis that “this will enable all Member States to maximise the positive synergies of belonging to the same Union” (according to this soon-to-be-approved Europaper).

What if the pursuit of synergies actually ends up meaning that any component parts – in either Europe or the corporate world – are left unable to devise the specific approach that they need to suit their particular circumstances?

It’s not just theory. Look at what happens in practice. Has the imposition of a common interest rate across different EU countries created synergies? I suppose the level of debt and unemployment in Ireland, Spain, Greece, and perhaps also Portugal and Italy, as been synchronised, in a fashion. But is that synergy? 

In the same document, the Eurocrats claim “Europe has learned many of the lessons from the recent financial and economic crisis”. What nonsense. 

Like corporate fools in a boardroom without shareholders, the Eurocrats who now govern us continue to pile stupid decision upon further folly.  They talk of synergies.  The rest of us should sell.

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