Growth through mergers and acquisitions: how it won't be a loser's game

Abstract

Purpose During the 1990s we have seen an unprecedented wave of mergers and acquisitions (M&As). Despite managerial over‐optimism, research consistently showed that 50‐75 percent of M&As fail to live up to expectations. The article, drawing from both academic evidence and accumulated experience of companies that seem to have mastered the game of M&As, aims to offer managers and understandable and practical set of tips on what to seek and what to avoid when making such major strategic moves. Design/methodology/approach The article draws from relevant research evidence. Findings Although there is no “one size fits all” solution to the effective management of M&As, past research has offered us an extensive body of knowledge. The article draws attention not only to mistakes that take place after the merger, but also to mistakes that usually take place before the merger. It seems that in many cases the seeds of an unsuccessful merger have been sown well before the deal is signed. Practical implications The article presents a series of questions managers should honestly answer themselves in order to avoid these mistakes. Originality/value Finally, the article ends with an optimistic view. In future more successful M&As will be seen, due to both the nature of current deals, as well as to the active involvement in the process by boards of directors and other stakeholders.

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