The truths behind the M&A myths - Outcomes of research and implications for business

The money at stake in M&A is mind boggling with annual global transactions in excess of US $2 trillion or (US $2,000,000,000,000). The pure volume of research that is available on M&A is also staggering and I ended up expanding the scope to include more than 70 papers.

What is really surprising is that after 30 years of studies and volumes of expert practitioner guidance the high failure rates remain.  When faced with a merger that fails to achieve the original high expectations, many will still claim 2^nd best as a success.

The researchers academics and practitioners from around the globe have looked at every conceivable perspective of M&A from financial, people, cultural, cross border, systems, re-integration, etc.  There is too much information to present it all here but I have picked out some highlights.

As mentioned in my previous news article “Why do most mergers fail?” the overwhelming findings of the research, surveys and studies are that 70% of mergers and acquisitions fail to achieve expectations and more than half destroy value. Approximately one third are successful or very successful, one third are effectively neutral, and one third bad to disastrous.  What about the common yet seemingly contradictory M&A myths such as 30% are successful, 70% fail to achieve expectations, half destroy value, and 70% of CEO believe their M&A’s were successful?  It is in the middle third where there is either a negligible gain or a negligible loss, combined with what twist you want to present, that allows for the common myths to hold true (refer diagram).

The research analyses failures and cites reasons such as:

• Poor strategic or cultural fit
• Overconfidence or hubris
• Inadequate due diligence
• Not managing people issues well

The research also identifies factors associated with success:

• Clear M&A strategy and processes
• Target companies the parent understands
• Selective integration
• Great communication and engagement

To help guide companies to achieve better outcomes with their M&A, VSC Growth has combined the detailed research findings with extensive personal experience and developed an “M&A Framework for Success”. The framework offers you the opportunity to:

• Reduce risks by learning from others mistakes
• Build the skills & confidence of your support team
• Focus your energies where you can create the most value
• Uncover latent opportunities on old deals
• More regularly deliver the promise of increased shareholder value

If you would like to see the the research and “M&A Framework for Success” please contact me. With a willingness to improve outcomes and with the benefit of other’s experience, there is no need to accept 2^nd best.

For more information or a consultation phone +61 412 148428 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it