Why M&A Deals Fail

Companies that make multiple acquisitions are much more likely to have successful merger and acquisition (M&A) transactions than companies that have made one or less acquisitions in the past five years, according to a recent Boston Consulting Group (BCG) article. In fact, over 50 percent of all M&A transactions result in negative shareholder returns.

The main culprits appear to be related to post-merger integration, especially:

• Poor integration of the target organization
• Higher complexity than anticipated
• Difficult cultural fit
• Synergies that fail to materialize

Other notable figures from the article:

• Chance favors the well-prepared acquirer. Over 35% of acquisitions stem from a “window of opportunity” when a specific target becomes available.
• Nearly 50% of M&A transactions result from a focused review of internal strategic portfolios or target search process.
• Almost 60% of all opportunities are immediately rejected, with only 14 % getting to due diligence.

Click here to read the entire BCG article.