What are the top three reasons that M&As are not success/fail?


This topic contains 23 replies, has 23 voices, and was last updated by  Thomas Teltscher 8 months, 2 weeks ago.

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    1. Inaccurate Data and Valuation Mistakes
    2. Integration Obstacles
    3. Lack of Planning and Strategy



    I see many of the reasons I would assume to be the top reasons for failing M&As in the other replies. I also see comments about poor due diligence and actually think there is an added side to that issue: Management unwilling to acknowledge insights and data encountered during due diligence that suggest they should walk away from the deal. Call it hubris or a fixed mindset, but once the deal has “taken place” inside the minds of top managements minds, due diligence becomes a formalism that needs to be completed. Particularly if they have come to see an acquisition as “the solution” to some of the struggles the company is facing, it is difficult to face reality and walk away – because then what?


    in my opinion based on experiences:
    1. Over value or buy the company with over price
    2. fail to realize the synergy, this is the reason in first place why we buy a company
    3. Fail to do cultural integration, the culture is not between different countries but also between both company



    People issues: Inability to retain top talent, incompatibility of culture, loss of intellectual property when top talent is lost.

    Many of the responses above are very similar, containing culture and due diligence as critical reasons. The three I mentioned can be addressed during the due diligence phase. According to several M&A professionals, while there is strong financial, legal, and operational due diligence, Human Capital Due Diligence is significantly lacking in most transactions. Depending on the study, the 1-3 year post-close failure rate appears to average over 60%.

    With strong human capital due diligence, cultural integration elements can be resolved, strategic workforce planning can be aligned with the new vision of the combined entity, and appropriate initiatives developed to retain top talent. Human Capital Due Diligence often focuses on total rewards plan alignment (determining the most cost effective solutions) and where certain human capital compliance risks exist. These are important but focus on immediate costs. For the merged entity to be successful long-term, there needs to be a better understanding of the future state roles that do not exist, the succession planning to take current talent and grow them into those roles, and an identification of the top talent who needs to be retained either as successors to the future state roles or as critical to the current organizational performance success.



    1. Inaccurate Data and Valuation Mistakes.
    2. Insufficient Owner Involvement.
    3. Integration Obstacles.


    Yoke Chang Tan

    Insufficient/poor due diligence
    Poor integration post acquisition



    1. Poor Leadership
    2. Insufficient Due Diligence and integration planning
    3. Lack of Cultural Fit



    i) Misalignment of management, ii) inconclusive policies governing intellectual property and iii) Lack of transparency.


    Thomas Teltscher

    The three key success factors in my mind are:
    1) Deciding for M&A for the right reasons with the right strategy in mind and choosing a suitable target that meets the requirements, even if it may take longer to find such a target
    2) Covering all bases, using a data and fact driven approach, stringent project management and proactive planning
    3) Remembering that acquisitions & integrations require people to make them a success and focusing on people accordingly throughout the process

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