Globalization has fueled the market for mergers and acquisitions, and as a strategy for developing sustainable competitive advantage, significant increases in transactional activity are expected in the future. However according to collated research and a recent Harvard Business Review report, the failure rate for mergers and acquisitions sits between 70 and 90 percent.

Mergers and Acquisitions is risky business. We believe such deals should come with an official warning: “Acquisitions can result in serious damage to your company’s health and may even cause death.” Not only are you bringing two companies together and redirecting under a single corporate mission, but bringing together large amounts of people with their own behaviors, personalities, and personal goals and uniting them under that direction by two potentially different leadership styles is inherently more complicated than most leaders realize. Integration difficulties often occur because of the change dynamics created specific to the merger, and key talent integral in merger synergy is often lost. This becomes even more complicated with multiple operational center locations and perhaps cross border cultural issues.

Often executives bring insufficient discipline to the evaluation stage of a deal, and premature optimism result in over calculation of revenue synergies, and under calculation of merger costs. Energized behavior is more a function of emotional commitment than rational compliance. A successful merger or acquisition requires more preparation than is commonly anticipated. It is much easier to do a deal than to implement one, and thus the 70 percent plus failure rate.

Our experience has led to development of a M&A Process Framework that incorporates best practises. It is designed to strategically guide your executive team through the necessary deal stages, assess and reduce risk, and enable successful integration regardless of whether your M&A strategy has long-term implications or is limited to only risks that impact valuation.