ORGANIZATIONS THAT TRACK MERGER AND ACQUISITION ACTIVITY OFTEN REPORT THAT APPROXIMATELY 50% OF TRANSACTIONS END UP ULTIMATELY FAILING. Some may be surprised
that so many deals end unsuccessfully, but trying to integrate two separate entities, often with disparate cultures and “personalities,” is a complex and risky proposition. Reasons for doing a deal must make sense (i.e., are properly vetted), and a thorough examination of the ability of combined entities to adapt and “change stripes” can be critical. Too often, important considerations are deferred (“we’ll look at that later”) versus a proactive attempt to identify barriers that need to be overcome for a combination to be successful.
Having witnessed some successful mergers as well as being part of two failed acquisitions, my take on key reasons for failure is outlined below.
