Hi, I’ve also done some personal research into why 83% of M&A are non-accretive.
Some of the reasons are:
1. Wrong Deal Structure: Over-financed with debt lead to minimum margin for errors
2. Wrong Trend: Assumptions was based on existing market conditions and reality turned out to be very different
3. Overpaying: This would be due to managerial EGO, which could be assessed through personality profiling (and for NPD)
4. Overestimation of Synergies: Most projections are overoptimistic and unable to realise or cost too much to realise
5. Lack of Due Diligence: There needs to be confirmation of “stories” and “sales pitches”
6. Wrong Integration Strategy: Lack of understanding and utilisation of wrong integration strategy
7. Cultural Misfit: Clash between cultures and lack of proper management capabilities to handle it
8. Lack of Capacity for Integration: It requires 100 to 200 man years to complete a proper M&A integration, and expecting existing employees to do business as usual along with integration is expecting too much of them
9. Poor Senior Management Ability: Lack of Communication of the “end-state” vision along with lack of proper integration plan (to execute on).
10. Lack of communication and inclusiveness with all function heads and company to run the integration together, as a collective.
I did this research over a few months and hope it’d be of value to you. Cheers