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The Two Most Common Pitfalls of Post-Merger Integration

The Two Most Common Pitfalls of Post-Merger Integration

Why the majority of M&A deals destroy, rather than create, shareholder value and how to buck that trend

Highland Insights White Paper

July 12, 2013

The Highland Group

Mergers and acquisitions (M&A) form a key component of many companies’ growth plans. Accordingly, the global market for deals is bustling and immense. In 2012 – a relatively subdued year compared to most of the preceding decade – there were more than 12,500 transactions around the world totalling nearly $2.2 trillion in value, according to Mergermarket. Management teams all strive to ensure that M&A transactions create value for their companies, but they all too frequently fail.

Many theories have been advanced to explain the poor track record of M&A deals, including poor planning and due diligence, loss of key personnel and customers, clashes of company cultures, power struggles and management hubris, and lack of relatedness between the merging firms. Despite the scores of management textbooks and analyses written on the subject, The Highland Group has found from its extensive experience helping clients successfully navigate the M&A process that the most common merger problems can be distilled down to two linked factors: operations and people.

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