What are the key risks in the different phases in an M&A transaction?


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    Karl Heinz Foertsch

    Would like to understand what the key risks in the different phases in M&A transaction are. Quite a few studies indicate that many transactions do not meet their original targets and / or destroy economic value.


    Riccardo Scaioli

    As you correctly mentioned, there are key risks that can be associated to all the phases of M&A transactions. To name a few, starting from due diligence, not having considered all the financial aspects of the target, or not having conducted a proper research and investigation, can have the risk for the buyer to buy at a higher price and have impact on the value of seller; not having considered how to properly manage the integration, then, can be disruptive and can either delay the proposed timeline (sometimes never reaching its original and planned goal) or having massive consequences, such as poor retention from the acquired business. These two are the areas in which I have a bit more knowledge about, and other experts can give you more detailed analysis or provide further examples.


    Yaw Adom-Boateng

    Yes, various research confirms that most M&A transactions failed to achieve the desired expectation. For each of the phases, there exists varying risks but in general, the key risks include Determination of strategic objectives
    1. Over-estimated Synergies
    2. Finding the right target
    3. Conducting due diligence
    4. Paying the right price
    5. Incompatible Cultures
    6. Post-merger integration


    Brandon Kissinger

    Double clicking into this question, I do wonder if “current business cycle” doesn’t play a larger role in the success of an acquisition. On slide 6 of that presentation, I was surprised to see that +60% of M&A are deemed a failure. Would be interesting to superimpose a timeline on those percentages to get a better idea of the each vintage.



    Love Risk topics. Some key risks are dependent on your strategic objectives so it’s a good idea to align strategies to synergies so you do not take a fall with the following key risks:

    1. Over-estimating Synergies (Stay conservative and reasonable and the rest becomes good news!)
    2. Post-merger integration resource delays
    3. Incompatible Cultures
    4. Paying what it’s worth not what they sell it for

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