Why M&A Deals (Still) Fail


Some hints: Strategy usually is not the problem; sometimes financial projections don’t include important considerations; and almost always it’s execution that falls short.

At the start of a current research project I’m working on [see below if you want to participate] I did the proverbial Google search on “reasons for M&A failure” to see if anything has changed recently.  My search returned 1.84 million results in under half a second. When I narrowed the search to include only studies, articles and blog posts since 2015, Google returned a pared down 553 thousand results.  In reading the major research and scanning the headlines of other entries, there were not new topics on this list.

Having said that, the digital disruption phenomenon is adding emphasis and giving air time to issues that come up when organisations acquire businesses in order to buy (rather than build) capability.  These risks stem from buying and integrating businesses that are not fully understood; and these risks are compounded by person / capability dependencies for capturing expected value from each acquisition.

Common M&A pitfalls can be organised (roughly) into three categories – problems with strategy; inaccurate projections; and execution trouble.  Following is a summary of what to look out for and address if you want to avoid deal disappointment.

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More than half of these absolutely predictable pitfalls are related to how people respond to changes brought about by the deal. Time and time again dealmakers underestimate these, to the detriment of expected outcomes. Organisations either completely miss agreed targets; or they achieve expected outcomes, but at the cost of people’s wellbeing and, by definition, miss out on opportunities for creating additional value.

I sincerely believe that where organisations invest to improve the experiences people have whilst working on and living through deals, they also will directly improve deal outcomes. And I’m currently testing this hypothesis by doing an original research project.

A crucial step in this project is to collect the views and experiences of people who have been impacted in some way by organisations going through mergers, acquisitions, divestitures and other scenarios where businesses are joined together or taken apart. Would you be willing to contribute?

I would love to have your input via a ten minute, anonymous survey. You can reach it using this link https://www.surveymonkey.com/r/IAIDGH2. I am not tracking responses but if you’d prefer, just copy and paste the link into your browser.

Thanks for your consideration!

Whether you decide to participate or not, you are welcome to receive a copy of the research report (we’re aiming for sometime after June). Just go to http://iselyassociates.com.au/insights/research/ where you can register your interest. We’ll send you a copy as soon as it is available.