Mergers and Acquisitions (M&A) are strategic deals which can turn around the company and bring it on the top like Mittal Steel. But it can also bring the company's fortune to its lowest possible levels. This article discusses the various factors leading to success or failure of M&A.

Mergers and Acquisitions (M&A) often grab headlines of the newspapers and business pages. It has become a sign that shows a particular company is growing by leaps and bounds. Every year the number of M&A increases. Companies like Mittal Steel and Oracle have enriched their successes by M&A. From horizontal and vertical mergers, the deals have come a long way to conglomerate M&A.

But a few of them do not result in success stories. After the M&A, the next quarter profits of a company may decline like the profits of Oriental Bank of Commerce (acquired by Global Trust Bank) declined by 23%. Or the share prices of acquirer may fall continuously for a long time, e.g., Jet Airways share prices continuously declined after the Sahara deal. At one time, its prices came to around Rs. 496 from Rs. 1,207 and till now it is not able to touch Rs. 1,000 mark.

There are instances when mergers result in legal battles also like HP and Compaq, which can reduce shareholders' value for a long period. Due to the presence of a competitor there can be revaluation of the target company and the prices what the acquirer pays may become much greater than the initial prices like in the case of Tata Corus. So M&A may result in reduction of the value of shareholders or increase their value but not in the same proportion as expected.

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