Business, Management, Integration, M&A, Merger, Acquisition, Identity
Business | Business Administration, Management, and Operations
Every year companies spend over $4 trillion on mergers and acquisitions (M&As) in spite of the fact that between 70% to 90% of these M&As fail. Both practitioners and scholars are puzzled by these intriguing statistic and have tried to identify the causes of M&A failures. Factors such as inaccurate assessment of financial and operational synergies, lack of clarity in the execution of the integration process, negotiation errors, lack of backup plans, and cultural issues are only a few of the long list of reasons that may lead to such high rate of failure. Evidently, some of these factors have been analyzed more than the others and a lack of promising evidence has generated strong sentiments for giving additional attention to the causes that are not as heavily explored. For instance, while many studies highlight the importance of financial, accounting, and valuecreating synergies in post-acquisition performance, others have noted that a lot more work is needed in evaluating the role of behavioral factors such as understanding cultural and identity changes in post-acquisition success.
Joshi, M., Sanchez, C., & Mudde, P. (2020). Improving the M&A success rate: Identity may be the key. Journal of Business Strategy, 41(1), 50–57. https://doi.org/10.1108/JBS-08-2017-0115
Sanchez, Carol M.; Joshi, Mahendra; and Mudde, Paul, "Improving the M&A success rate: Identity may be the key" (2020). Peer Reviewed Articles. 42.