Less than a third of corporate mergers fail to live up to expectations and struggle to deliver value, according to new research.
The report, by management consultancy Hay Group, found that companies find it difficult to combine corporate structures and cultures, a problem which has resulted in a huge 97% of UK mergers and acquisitions failing to meet their objectives.
Following the recent acquisitions boom in 2006-07 that saw deals exceed 1.35trillion euros in 2006, the report suggests that firms are likely to be struggling with the knock on effects.
Less than a third (28%) of businesses felt that their merger added value to their business.
Even so, mergers and acquisitions remain a key method of growth in the global marketplace – $90bn of new deals were announced in the first week of October.
The report puts M&A failure down to ‘critical omissions’ in companies’ due diligence and post-merger integration strategies.
“Integrating intangible assets six months after a deal has gone live is too late,” warned David Derain, director within Hay Group.
“Companies should be examining the compatibility and differences between the two firms well before the deal is made public in order to have a clear plan of action in place right from the start.”
Over a third (38%) of business leaders said they were dissatisfied with the current merger climate, with a fifth describing the first few months as a ‘culture shock.’
© Crimson Business Ltd. 2007
