Stephanie Cohen – The Evolution of M&A and Corporate Strategy

**Patrick O'Shaughnessy** (0:04)
Hello, and welcome everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_3** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:49)
My guest this week is Stephanie Cohen, who is the Chief Strategy Officer for Goldman Sachs and a member of their management committee.
Prior to her current role, she spent the majority of her career in the investment banking and M&A divisions at Goldman. We discussed lessons learned from her career in M&A and the many initiatives she leads now at the firm. I really enjoyed her perspective on how a big established firm like Goldman can balance innovation with improving existing businesses. Please enjoy our conversation.
You mentioned this idea of synergies. I'm very interested in the M&A side to know sort of the pure and impure motives from both sides, acquirer and acquiree, for doing these sorts of deals. So there's some literature that suggests that the average M&A deal is not good for the acquiring company. I'm curious to hear your thoughts on that, having been on the inside. That's a very like quant take, not a company by company take. So what do you think the right reasons are where the most value is created for a big, let's say merger or acquisition? And then the second question will be what are the wrong ways to do this?

**Stephanie Cohen** (1:46)
The one comment on your original thesis, which is are people putting together information appropriately on the buy side and the sell side? The one thing about M&A is it's an experience based business. So if you're an advisor, you're constantly doing M&A, by the way, with many of the same people.
Generally, if you're a company, you're not one and done. It's quite unlikely that you're going to do one deal, whether that's a divestiture or a buy side, and then you're never going to enter the M&A market again. So I actually think people spend more time than you think doing the right thing. I understand the comments, but I actually think people spend more time.
And some of that can just be selfish, which is they know they're going to meet these people again.
On why to do M&A. So I'll talk a little bit actually at my current seat, which is more the strategy seat, which is M&A is just a method of executing strategy. It's not the reason.
And we'll talk about strategic M&A versus more financially oriented financial sponsor related M&A. But if you're a strategic buyer, M&A is a way to achieve your strategy. So I think it's really important that you actually have a strategy. And so you know where you're headed. And then you know whether or not you can achieve things organically and organically and how to compare the two. And so I think people who are doing M&A well are just doing it as part of their everyday business in terms of trying to drive their strategy. And we find more and more companies actually have those two things together in the same place. The bad reasons to do M&A are the obvious, which is that you feel like your core business isn't growing. And so then you're doing M&A to make up for that. And we certainly have examples in history where people have had a hard time keeping up with the market's expectations of their own growth. And then they're doing M&A to chase that rather than doing it for strategic reasons.

**Patrick O'Shaughnessy** (3:24)
What's the most difficult deal that you were ever a part of?

**Stephanie Cohen** (3:27)
I worked on Fiat Chrysler, which was when Chrysler paid off the US government. And so that was very hard time for the world.
And it was really important to the company to get out from underneath the US government and to basically give them a return on their investment and to be a private enterprise and to be able to move forward. And it was a time from an economic perspective where it wasn't clear where the world was headed. It certainly was complicated because there were multiple governments actually in there. The Canadian government and the US government was there in addition to the pension having a perspective.