Reasons for frequent failure in mergers and acquisitions : a comprehensive analysis

Abstract

Despite the goal of performance improvement, results from mergers and acquisitions (M&A) are often disappointing. Numerous empirical studies show high failure rates of M&A deals. Studies are mostly focused on individual determinants. The literature therefore lacks a more comprehensive framework that includes different perspectives. Using four statistical methods, Thomas Straub shows that M&A performance is a multi-dimensional function. For a successful deal, the following key success factors should be taken into account: • Strategic logic which is reflected by six determinants: market similarities, market complementarities, operational similarities, operational complementarities, market power, and purchasing power. • Organizational integration which is reflected by three determinants: acquisition experience, relative size, cultural compatibility. • Financial / price perspective which is reflected by three determinants: acquisition premium, bidding process, and due diligence. All 12 variables are presumed to affect performance either positively or negatively. Post-M&A performance is measured by synergy realization, relative performance (compared to competition), and absolute performance.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 42 citations exist upstream.