The Merger Myth

Recently I spoke with a friend in the financial services industry whose company had announced “a merger of equals.” Such a merger is a big deal. Having assisted clients over the years with this type of leadership challenge, I asked her what they were doing to prepare people.  She said, “John, we are all over that--our CEO has instructed us to get close to our people.” It’s one of the dumbest things I’ve heard very smart people say. The approach sounds logical, but it’s also a key reason 83% of mergers and acquisitions fail to deliver expected results (KPMG study, MoneyWatch, April 2012).

I’ve heard all the talk about multiples, competitive edge, market dominance, technology capture, culture compatibility, etc.—all good business thinking that we find at the best MBA schools. Few savvy executives go into a merger without having done their homework, run it through their financial models, and performed a detailed due diligence.  So why do so many fail?  Continue reading