Abstract

The case discusses the merger of one of the largest investment banks in the US - Morgan Stanley with Dean Witter, Discover & Company, a retail firm specializing in stock brokerage, asset management and credit cards in 1997. Though analysts raised doubts about the success of the merger, initially the merger proved to be successful placing Morgan Stanley Dean Witter among the top investment banking and financial services companies. However, in the early 2000s, with the slowdown in the US economy, the merged entity reported declining revenues and profits and exodus of key top management personnel. The then CEO of Morgan Stanley Dean Witter, Phil Purcell forced out President & COO John Mack in 2001. By 2005, Morgan Stanley was embroiled in governance and legal problems, which affected its business performance and financial position. A group of eight former executives of Morgan Stanley campaigned against Purcell leading to its ouster in June 2005. This case illustrates the role of top management and good governance in the success/failure of a merger.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Examine the synergies of merger between Morgan Stanley and Dean Witter
• Understand the reasons for the success of Morgan Stanley Dean Witter merger during its initial years
• Study the role of top management in the success of a merger.

Keywords

Morgan Stanley. , Dean Witter, Discover & Company., Mergers and Acquisitions, Philip J Purcell, Business Segments, Cultural Problems, Governance, Legal Problems, Group of Eight, Merger Integration