Over 90 per cent of European corporate mergers and acquisitions fall short of objectives, as companies struggle to combine corporate cultures or governance structures, according to a new study from Hay Group, a global consulting firm that also conducts annual research for Fortune magazine’s list of Most Admired Companies.
Just 9 per cent of mergers are “completely successful” in achieving their stated objectives, the study revealed.
The results are part of a three-pronged research programme of 200 senior European business leaders who have experienced a major M&A during the past three years, analysis of the 100 largest European M&As in the period and, finally, a survey of 300 global employees of merging organisations conducted by the Sorbonne university in Paris
The findings are particularly striking in light of last year’s acquisitions boom, when European deals topped $1,800bn, according to Thomson Financial data. The report’s author David Derain, Hay Group European M&A director, said the obvious conclusion is that the enormous amounts invested in M&A are not delivering their promised value.
Hay Group’s study found that companies are prioritising financial and systems due diligence at the expense of the intangible assets critical to a merger process. Nearly all (93 per cent) of business leaders surveyed put traditional financial due diligence as a high priority, while over half the respondents focused on IT systems integration. However 58 per cent felt that putting too much emphasis on systems integration resulted in insufficient focus on intangible assets and cultural integration.