Reasons Why Mergers & Acquisitions Fail And Succeed

This topic contains 3 replies, has 4 voices, and was last updated by  Craig Hasler 3 days, 20 hours ago.

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  • #121817

    Yazeed Albaiz
    Participant

    According to research from a Harvard Business Review report, the failure rate for mergers and acquisitions is between 70% and 90%. The reasons for such a high rate of failure include:
    – Inadequate Due Diligence
    – False Sense of Security
    – Lack of Low-Level Management Involvement
    – Failure to Recognize Culture Synergies/Differences
    – Don’t Stress the Press
    – Understand the Value Added

    Any other ideas?

    #121923

    Ahmed Zainalabedin
    Participant

    I would add poor post merger integration planning.

    #121974

    Millie Manning
    Participant

    I would add unclear strategy – a company that gets in the habit of acquisition for acquisition’s sake may wind up with a target company that doesn’t strategically make sense, simply because they are on a roll, or are swayed by the target’s reputation, personality, or ego.

    #122542

    Craig Hasler
    Participant

    Hi Yazeed,

    Thanks for the prompt.

    I’d be interested to know what their definition of a “merger failure” is. Is it inadequate capture of synergies identified in the board plan…or lack of fit within the new company? Both Ahmed and Millie present solid points above… I would also add that in some cases management will move forward with a deal to avoid time and investment to develop a particular technology or offering internally. The simple solution is always to “buy” instead of “build”. In certain cases, we’ve seen that companies will pay a steep price (overpay) to acquire a technology for the sake of speed and simplicity (or as a defense mechanism vs. competitors).

    Do you have a link to the HBR article?

    Craig

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