The fate of Chrysler is now in the hands of Private Equity organization Cerberus. If step one is win the take-over battle, step two is installing the top management team to execute the transformation plan.
It is difficult to conceive of step one being completed without parallel efforts occuring to secure the person or persons believed capable of getting the job done. Sometimes the leader has been in place before the venture capital is sorted out.
It was Associated Press that broke the news.
Chrysler’s new private owners have picked former Home Depot boss Bob Nardelli to head the No. 3 U.S. automaker in its effort to return to financial health, a person close to the process said Sunday
The leak was rapidly followed by official confirmation. Bob Nardelli has been appointed. The complex twists and turns in Chrysler’s fortunes continue.
German auto magnate Dieter Zetsche had headed the Merger between Chrysler and Daimler. But the move failed to deliver its promise of a transition to a globally competetive firm. The escalating debts at Chrysler led Zetsche first to indicate that all options had to be sonsidered. Eventually, the ultimate option was exercized, and Chrysler put up for sale. In May 2007, Cerberus Capital Management won over other bids.
There were further twists to the tale. The planned finance packages could not be sold to the finance houses. With a jittery financial context, it seemed that the deal would fall through. But where there’s a will there’s a way. Daimler even played a part in financing its own sale. The deal squeeked through.
Private Equity deals rely on having a clear plan for recovery of investments. The financials often indicate assets that can be sold off to that effect. Sometimes the deal implies replacement of lethargic leadership with others more willing to ‘do what it takes’ to ‘liberate’ those under-utilized assets. Detractors point to the excessive zeal from such slash and burn leaders, and lack of concern for the historical purpose and values of the target organization.
Nardelli is a controversial figure. But the pattern of his leadership behavior may fit rather well for asset liberation. He is reputed to be high-handed and authoritarian. These may not be
particularly desirable characteristics, particularly for colleagues, including former Chrysler head Tom La Sorda, They may, however, appropriate for circumstances where speed outweighs consensus in decision-making.
Nardelli’s removal from Home Depot was attributed partly to a high-handed style particularly over his remuneration demands. It seems likely that such behaviors would have been overlooked, if the company had been able to achive its aspirations of growth under his leadership (which were probably unrealistic, but that’s another issue).
The new job offers a fascinating case study. (Not so fascinating as tough for employees, almost certainly). Will such a style fulfill the requirements of Cerberus and its future plans for the company? The conventional wisdom is that this sort of deal will provide generous financial rewards for the key players. In which case Nardelli’s leadership abilities will outweigh the bevaors that contributed to his problems at Home Depot. In either event, Cerberus will have obtained the leader they believed they needed and deserved.