Why Do Many Mergers and Acquisitions Fail?
Mergers and acquisitions fail for various reasons. The failure can be before the physical merger and acquisition take place, during the implementation process or during the running of the new merged entity. Potential failures are due to many factors, including: • Negotiations failure. No agreement is reached between the parties due to factors such as different cultures, expectations and risk profiles. • Legal issues. The competition laws of various countries often prohibit transactions that are considered to be anti-competitive. • Implementation problems. Systems (especially IT) are often not very compatible and difficult to merge. • Financial failure. The expected turnover and return on investment have not been achieved and/or the liquidity and solvency of the company are at risk. • People failure. Cultural differences, hostility from personnel and resignations can cause serious problems. • Planned strategic objectives are not achieved. This include the achievement of synergies such a