The Morgan Stanley - Dean Witter Merger

Case Code: BSTR209 Case Length: 19 Pages Period: 1997-2005 Pub Date: 2006 Teaching Note: Not Available

Price: Rs.400 Organization: Morgan Stanley & Company, Dean Witter Industry: Banking & Financial Services Countries: India Themes: Mergers, Acquisitions, Strategic Alliances

Abstract Case Intro 1 Case Intro 2 Excerpts

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.

Issues

The case is structured to achieve the following teaching 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
• Examine the nature of governance issues affecting the business performance of Morgan Stanley Dean Witter merger

Contents

A Mega Merger
Background Note
The Merger
Post Merger Devolopments
The Troubles Begin
Cultural Differences Persist
The Slow Down
Governance Problems
The Challenges
Exhibits

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

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