Here is an attempt at social satire.
There are striking similarities between our Indian practice of arranged marriages and corporate mergers & acquisitions. Of course, there are many significant differences, but they serve to classify an arranged marriage as a special case of an M&A transaction. Let’s take a ringside view of this social phenomenon.
Characterization
First, a marriage is like an acquisition, rather than a merger. The two parties enjoy unequal status, whether the social system is patriarchal or matriarchal. Let’s take the patriarchal system only, for simplicity. The bride shifts to the groom’s house with all her worldly assets (and then some, in case dowry is taken) & liabilities. The price paid by the groom is the cost borne on the marriage itself (a significant part of which is shared by the bride’s family, in most cases). The difference here is that this price is quite delinked from the value of the acquired firm (the bride). The groom’s family can spend pretty much anything they like on their side, based on their own status (the Fortune 500s of society like to spend a lot on theme marriages and such other social pastimes). The groom’s side does offer some presents to the bride and her family, in which case this is a cash-and-kind deal.
Motivation
The entire process of an arranged marriage generally begins with the boy or girl in the house attaining ‘marriageable age’ or completing his/her education. Thus, this market is only for mature firms. In fact, merger transactions between start-ups (children) are considered to be retrogressive and illegal. The top management (parents) looks out for interesting opportunities in the marriage market. The ward’s motivation may not be the same as that of the top management at all. His/her motivation may be more romantic or idealistic, while the top management thinks more practically and looks for tangible benefits and synergies.
The boy’s parents (often, the boy himself, as well) may not be interested in the girl’s own qualities, but in her family’s wealth. This is similar to trying to acquire a firm for its ‘crown jewels’.
Process
We start with two ‘eligible’ parties, the acquirer and the acquiree (the groom & the bride), both of whom have expressed their willingness to undertake the marriage transaction, initially unbeknownst to each other. Now, the parents on either side are like the investment bankers appointed as advisors. Their objective is to provide a turnkey solution to their respective wards, with the wards’ agreement not carrying much significance in many cases (not unlike the corporate world).
The parents utilize a lifetime of social networking in carrying out the search for a suitable candidate. Extensive documentation, in the way of bio-datas, and undocumented knowledge, in the form of hearsay, are accumulated about various candidates in the marriage market. This information, suitably biased by the parent-advisors according to their own liking, is presented to the ward (remember Utpal Dutt’s admonition to his daughter in ‘Golmaal’: tum us se shaadi nahin karogi jise tum prem karati ho, tum us se shaadi karogi jise main prem karata huun). Many times, parents who have been a bit weak on the networking front, employ third-, fourth-, fifth-party agents to broadbase the search process.
The next step is screening of candidates done jointly by the client (ward) and the parent-advisors. Conflict of interest is not uncommon here, and the ward may feel he/she is not being delivered quality service by his/her advisors. The ward and the parents may not agree on what ’synergies’ to focus on. Again, third-, fourth-, fifth-party agents who may enjoy more respect from the ward may be called on to persuade the ward to agree to a particular counterparty for the marriage transaction.
When the candidates on the two sides agree to explore matters a bit further with a shortlist of counterparties, the process of due diligence begins in due earnest. More searching questions are now asked of the other party, most notably, the boy’s pay, the number of servants in the boy’s house, the character of the girl (hardly anybody bothers about the boy’s character), the quality of management in the boy’s house (his parents), whether the boy lives in a joint family (which may categorized under ‘environmental issues’), and many many more. The entire checklist is beyond the scope of this post.
As things start getting serious, face-to-face negotiations begin, with the advisors on both sides playing hardball and trying to push through conditions favourable to their side. This is just like the final negotiations in an M&A transaction. Where dowry is taken, the negotiations are the toughest, though very unequal. The difference is that all these conditions are verbal, and aren’t being taken down frantically by a big team of lawyers. Pre-nuptial arrangements haven’t taken hold of the Indian imagination yet.
When a deal has been successfully thrashed out, the two sides issue a joint statement publicizing the engagement, often giving indicative timelines for the completion of the deal (marriage). Just like in a corporate merger, timing of the announcement is important for other candidates in the market who might also have set their sights on one of the two sides just engaged.
It is important to understand that a marriage is a ‘going-private’ transaction. The moment an engagement is announced, the shares of both parties are delisted from the market and, until certain developments (like divorce, etc.), both parties remain private.
Very much like in the corporate world, the real challenges lie in the post-merger integration phase. Both sides may discover hidden liabilities in the counterparty, renege on the verbal conditions agreed to during negotiation, experience managerial ego clashes, strive to take a profitable position in the ‘market for marital control’, etc. In the worst case, the husband’s family carries out ‘asset stripping’ - the practice of using up or selling the wife’s belongings and not letting her carry on operations (her job) or even, murdering her for dowry.
‘Accounting treatment’
In the corporate world, accounting for M&A can be done using one of two methods: the purchase method or the pooling of interests method. Now, most married people will agree that, on a philosophical level, if not at a financial one, there is no real ‘pooling’ of interests post-marriage. Thus, the purchase method of accounting wins by default.
However, there is a notable quirk in employing the purchase method for marriage. Ordinarily, the excess of the price paid by the acquirer over the identifiable tangible & intangible assets of the acquiree is classified as goodwill on the acquirer’s balance sheet. In case of a marriage, the price paid by the acquirer is not linked to the value of the acquiree. So there is no goodwill. Rather, it is possible to have ‘reverse goodwill’, if the bride brings in a lot of tangible assets on her parents’ money, over and above herself.
Drama
Corporate mergers, especially large ones, are often accompanied by high drama, when deviations from the above process occur. In the arranged marriage world too, such drama abounds. Some examples: The girl (acquiree) may not like her parent-advisors’ choice of suitor and look out for a ‘white knight’ more acceptable to her. Other candidates, jealous of a particular match-up, may spread canards about the candidates or their top managements to sow the seeds of doubt in either side. The less desperate side may put pressure on the more desperate one by starting talks with another party, thus forcing the latter to improve its offer in some way.
These were just a few, relatively quick, observations. I’m sure more perceptive and observant people out there will be able to think of many more comparable areas.
