It is a known fact that a majority of M&As, (which also include joint ventures/strategic alliances) which take place, fail to achieve the desired results fully. Some of them are titanic failures while others are failures of a lesser degree. Success in the true sense of the term in M&A history seems to be a fairly rare occurrence.
Mercer Management Consulting conducted a 10 year study of 340 major acquisitions and found that 57% of the merged companies lagged behind the performance average of the industry, three years after the transactions had been completed. Many of these mergers ended up destroying shareholder wealth, wasting valuable resources and failed to deliver.
According to a study by the Boston Consulting Group, out of 277 deals done between 1985 and 2000, 64% showed a drop in shareholder value. A Business Week (October 14, 2002) article entitled "Why Most Big Deals Don't Pay Off" reported that 61% of the buyers destroyed shareholder wealth. Some of the classic cases studied by management experts on M&A failures include those of AOL and Time Warner, Acquisition of Snapple by Quaker Oats, Acquisition of Columbia Pictures by Sony, Renault's merger proposal with Volvo, Daimler-Benz and Chrysler merger, etc. |
