中国法律博客
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My New Hero, David Wolf
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Consultants and other types of free agents come in two flavors: either they kiss total ass in hopes of getting clients or they speak the truth. My personal feeling is that developing a reputation for honesty will (eventually) get you those clients, but that's another issue.

David Wolf @ Silicon Hutong is apparently not afraid to speak truth to power (as my hippie friends would say):

I find it puzzling that a professor at one of the world's most prestigious business schools is still able to characterize Lenovo's acquisition of the IBM PC division as a "success." The only unqualified success to date is the one for which the investment bankers received a fee.

I think I'm getting aroused here.

My diatribes against investment bankers are high in frequency. I don't begrudge them their fat paychecks, I just question their skills and contribution to both their firms and to society.

David makes some good points about the general culture surrounding financial services folks, specifically the M&A sphere. He uses commentary from a Wharton professor on the Lenovo-IBM deal as an example of groupthink. That deal fit the template that is currently being pushed by the heavy hitters, so of course it is held up as a success, facts be damned.

Knowledge at Wharton may not be a peer-reviewed publication, but the public holds members of the academy to the same high standard regardless of medium. We expect academics to be, by virtue of their sinecured isolation from the rough-and-tumble of commerce, an intellectual priesthood focused on finding and telling The Truth. We do not expect them to be tenured fanboys for Wall Street's Big Swinging Dicks and Chicks. If the last two years have proven anything, it is that Wall Street could use more informed criticism from trusted and respected observers.

Academics sadly come in many flavors. I recall my law school profs. The Con Law guy did work on the side (pro bono) for inmates on death row. The Corporate Tax prof had part-time gigs for several of Boston's big law firms and collected some very nice consulting fees every month. That was a law school; I'm thinking that the Wharton guys are pretty much all grabbing as much outside money as they can, with the financial services industry being #1 on the list of employers.

Does such work color their judgment? Of course it does. It also probably gives them real tie-ins to the current state of the market, so it's not only a one-way street. But to think that profs are not out there shilling for their private-sector bosses, well, let's not be naive.

If China and her companies are proceeding cautiously in considering the value of mergers and acquisitions as a growth strategy, the record suggests that they should be encouraged to be careful. The last thing China needs is to spend her national treasure in a global corporate shopping spree. And given the size of the bonus checks in New York this year, I would suggest it is the last thing Wall Street needs as well.

M&A work is a wonderful cash cow for several service industries. For big law firms, it is on par with IPO work. Huge fees are generated, lots of associates are kept busy — it's the gift that keeps on giving.

If I'm a partner at a big law or accounting firm, or if I'm an investment banking organ donor from Sector 7-G, I'd be stupid not to talk up M&A. I don't respect any professor who would slant his opinion to appease his overlords, but I can understand it.

This financial services mindset, by the way, is not limited to M&A. How many times over the past ten years have we heard the protests (from the financial services folks via US government officials) to the Chinese government that liberalization was way too slow on things like derivatives, futures, and other innovative "products" that could spread risk and modernize the China financial sector?

They were beating that frickin' drum incessantly for years on end. The Chinese government wisely told them to relax, liberalization was on schedule, but it would proceed according to the Chinese government's timetable, factoring in their more conservative approach to the market.

This is all speculative, but I always thought that if Beijing had listened to these folks back in '99, '00, '01, it would have been a disaster. China wasn't ready yet. The "experts" at the time were industry shills who cared more about the possibility of gazillions in service fees than about spreading risk and helping modernize China.

Hey, I hope I'm not losing out to David as the most cynical person in Beijing. That would be a huge bummer. On the other hand, misery loves company.

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