Impirical Evidence on M&A

40% fail on financial grounds 55% fail on perceptions grounds 58% of acquisitions divested Porter

Who gains? 30% of target shareholders 1% of bidders

Post Merger management style 1. Arms length - Grand Met 2. Intensive Care, held in isolation then turned around 3. Subjurgation - Acquired company loses it identity in merged company - Rowntree 4. Collaboration - Interchange of capabilities - HP/Compaq

Results 1. Would companies have done even worse if no merged 2. Acquistion accounting may distort results 3. Improves ash flow 4. Managers of merged firms dont get on AOL Time Warner Steve Case 5. Companies overvalued at Purchase - Rowntree doubled in value 6. Companies dont implemented intended strategies 10% Fortune 7. Exec's dont do detail just the deal 8. Sabotage, strikes, resignations

See also M&A