AOL dumps $850M Bebo acquisition - Why big M&A rarely works

Yup that's the real issue... big bonuses for big M&A deals... just happened with Kraft buying Cadbury, huge bonus to the CEO for simply doing what they were hired to do.

http://yglesias.thinkprogress.org/archives/2010/04/corporate...

"Brief synopsis: Kraft acquires the 200 year old British confection-maker Cadbury after a heated battle. The chairwoman and CEO Irene Rosenfeld (already not a good sign, best practice is to separate the two roles) was awarded a 41% pay increase, bringing the total to $26 million for 2009 for her “exceptional role” in the Cadbury transaction, as well as her “commitment to fiscal discipline."

... "The punchline is that Kraft actually screwed up. Part of their plan for Cadbury involved closing off the company’s pension plan but there’s “an obscure clause in Cadbury’s pension trust deed that makes it almost impossible to close the scheme.” As a way ’round this obscure clause, they’ve issued an ultimatum to employees, threatening them with a pay freeze unless they “voluntarily” agree to opt out of the pension plan. Point being that no matter how obscure the clause may or may not have been, this is supposed to be part of your due diligence before you buy a company, to say nothing of “exceptional” performance"

Wrong way of thinking about it. A company like AOL does need to invest in modernizing their business model somehow to stay relevant. The Bebo buy was rather poor, but the general idea of rebuilding AOL into something else is a good plan. If they don't remake AOL into something else, the layoffs will keep coming as the company dies a slow death.