[Vahid Sharif]

Referring to the high rate of failure in M&A history, why we don’t design a new kind of collaboration and value creation instead of dissolving identity of one company into other. for example, can we setup a third company between acquirer and target and generate synergy through this company without sophisticated structural, procedural and HR restructuring that all these complications are source of future failure? We can name it modified joint venture or modified collaboration or alliances. We should really think about high rate of failure and shouldn’t ignore it anyway.It casts this idea in any literature surveyor’s mind that why we insist on a process that most likely fails? Why we don’t make it modified!

[Niklas Heinzelmann]

You raise a very insightful and important point about the traditional M&A approach and its high failure rate. Indeed, many studies show that a large proportion of mergers and acquisitions do not achieve their intended value, often due to cultural clashes, integration complexities, loss of identity, and employee turnover. Your suggestion of creating a third, collaborative entity to generate synergy without fully dissolving either company’s identity is a creative alternative that has conceptual merit and some precedent in practice.

[Mike]

In my experience synergies from the deal’s financial models typically rely on an acquisition. This has typically been driven by leveraging shared services or the acquiring company’s core competencies to decrease operating costs of the target and derive incremental value of the joined entities. I think what you’re referring to are Joint Ventures, where two or more companies come together to create a new product or service from the collaborating parties’ IP, core competencies, or market reach. This is a different, but effective path to shareholder value creation – but may take considerably more time.

[Saeed Zeinali]

Vahid raises a question that deserves more attention than it typically gets. The persistence of traditional M&A despite documented failure rates is partly institutional inertia and partly structural. Investment banks, lawyers, and advisors have playbooks built around full acquisitions. The fees, the accounting treatment, and the control dynamics all favor complete ownership transfer.
That said, the “third entity” concept you describe is gaining traction in practice, even if not always labeled as such. Venture studios and corporate venture builders operate on a similar premise: create new entities where corporates contribute capital and distribution while entrepreneurs contribute innovation and speed. Neither party dissolves into the other. Value is generated through collaboration rather than integration.
The challenge is governance. Joint ventures and hybrid structures often struggle with decision making when parent companies have conflicting priorities. Who controls the board? Who breaks ties? How do you handle situations where the third entity competes with one parent’s legacy business?
Mike’s point about synergy models is well taken. If the deal thesis depends on cost takeout through shared services, you probably need full ownership to execute. But if the thesis is about market access, capability building, or innovation capture, modified structures can work and often preserve more value than forced integration.
The real question might be: how do we get deal teams to model value creation pathways beyond cost synergies from the start?

[Author]

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