The Failure of M&A’s to Deliver Added Value
(and what can be done about it)
Performance Equations Whitepaper
As a general rule, a majority of mergers and acquisitions do not achieve the objectives that the parties hoped to achieve through the transaction. In other words, a majority of mergers and acquisitions fail. Studies have documented that anywhere from 50 – 80 percent of all mergers and acquisitions fail. A recent KPMG analysis of UK mergers and acquisitions during the 1990s found that, of the mergers, some 75%+ had demerged within 10 years and a similar number of acquired organisations had been resold within a similar timescale, often for less than the original purchase price .
Mergers and acquisitions have left behind a trail of ultimate under-achievement, of unhappy staff and dissatisfied customers. Financial performance, debt, market share, brand positioning and reputation, product and service fit, and physical operations are some of the hard issues that usually receive much scrutiny before a merger or acquisition is consummated.
Unfortunately, it is the less technical or “soft” issues that rarely receive the same level of attention before the merger or acquisition decision is made. Yet, these are the very issues that cause the majority of mergers and acquisitions to fail. Poor understanding of how to integrate two corporate cultures has led to low morale at many levels, confusion among customers – and potential customers – and, inevitably, business underperformance.
Read our whitepaper on the failure of M&A’s to deliver added-value and what can be done about it