REASONS
BEHIND FAILED MERGERS
Poor strategic fit
- The two companies have strategies and objectives that are too different and
they conflict with one another.
Cultural and Social Differences
- It has been said that most problems can be traced to "people
problems." If the two companies have wide differences in cultures, then
synergy values can be very elusive.
Incomplete and Inadequate Due Diligence
- Due diligence is the "watchdog" within the M & A Process. If
you fail to let the watchdog do his job, you are in for some serious
problems within the M & A Process.
Poorly Managed Integration
- The integration of two companies requires a very high level of quality
management. In the words of one CEO, "give me some people who know the
drill." Integration is often poorly managed with little planning and
design. As a result, implementation fails.
Paying too Much
- In today's merger frenzy world, it is not unusual for the acquiring company
to pay a premium for the Target Company. Premiums are paid based on
expectations of synergies. However, if synergies are not realized, then the
premium paid to acquire the target is never recouped.
Overly Optimistic
- If the acquiring company is too optimistic in its projections about the
Target Company, then bad decisions will be made within the M & A Process.
An overly optimistic forecast or conclusion about a critical issue can lead to
a failed merger.
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