What NewCo Never Reached

I see expressions darken when I talk about what I do.

I attend four-to-six networking events a month. When I mention I work with PE-backed companies, and M&A, I’ve seen it enough times now that I recognize it before they say a word.

The details are always different, but the story is always the same.

They lived through a rough acquisition.

The pattern is consistent, no matter the role, the industry, or timeframe that I’ve stopped being surprised by it. Instead, I think about the cost.

The pattern: the acquiring company comes in assuming their way is the right way. They don’t bother to learn what was working or why. People feel diminished just for being on the acquired side.

The acquirer paid a premium for something—infrastructure, equipment, scope, customers—then systematically undermines it. The losses compound across every layer. People leave who take institutional knowledge with them. The ones who stay shrink themselves to survive. And, no matter how successful NewCo is, it’s less than what was possible.

Last week’s conversation was with a former Sprint employee who talked about being acquired by T-Mobile. He said T-Mobile dismissed everything from Sprint that didn’t meet their scrappy youthful culture. T-Mobile grew their network capacity, towers, subscriber bases and legacy platforms. But they also lost 100,000 employees from layoffs and spin-offs. And they let their properties become run down. What was left were threadbare rugs and poor morale.

Even more interesting is that he had been part of the NexTel-Sprint deal with a very different experience. Both sides found a way to operate in their lanes and preserve what each had brought. Different expertise, different infrastructure, respected as such.

Sprint knew how to do this. And their integration wisdom was lost. Along with institutional knowledge of both Sprint and NexTel. Sprint had tried to purchase T-Mobile before, but the deal fell through due to U.S regulators at the FCC and Justice Department. But it wasn’t until 2020, when the tables turned and T-Mobile was able to get the flipped deal across the finish line. By all accounts, T-Mobile won big.

McKinsey & Company were brought in as strategic advisors of the business integration. But hearing the story from the man standing across from me, makes me wonder why things weren’t different. Deals will always be done. But it makes me question what McKinsey left on the table.

What if Sprint and T-Mobile had approached the table with a questioning mind. Each system, each process probed for positives and negatives—with both teams at the table seeking the best outcome. The end result might be the same—the acquiring system or process being selected. But it would be because it held the right weight with gaps identified and strengthened in the process. And what would be built is a stronger more cohesive team. Maybe.

This is last week’s story. Next week’s story will be the same with different players and details. But in each darkened expression, I see the ceiling of what NewCo never reached. I wonder how many deals are happening now, running old playbooks, leaving the same potential on the table.