Post Merger Integration underscores the success of mergers
The global volume of mergers and acquisitions in the first half of 2011 was put at around EUR 900 billion. Yet the failure rate seems almost as high as the takeover rate. The biggest stumbling block is going about integration and synergy management the wrong way.
Google ingests Motorola Mobility. Beer giant SABMiller launches a hostile takeover bid for Australia's number one beer brand Foster's. Fiat acquires a majority stake in Chrysler. US pharmaceuticals service provider Express Scripts swallows rival Medco Health Solutions. Microsoft buys Skype. And Volkswagen seeks to make a big splash on the international commercial vehicle market by snapping up MAN. Browse through the business press and it seems companies are acquiring and merging like there is no tomorrow.
Not a trace of a hangover from the crisis, then. Thomson Financial puts the global volume of mergers and acquisitions (M&As) in the first half of 2011 at around EUR 900 billion, not including transactions in the private equity sector. That is a year-on-year increase of 50%. Yet the failure rate seems almost as high as the takeover rate.
The biggest stumbling block is going about integration and synergy management the wrong way. According to the Roland Berger study, this is the one factor to which 80% of the respondent experts primarily attribute the failure of acquisitions. Other reasons are also cited, but play a far less significant role. They include culture shocks that drain all the energy from the new entity, exorbitant acquisition prices and the egos of the chief executives involved. All these factors can leave a merged or merging enterprise unable to exploit its new opportunities.