Magazine article Global Finance

Mergers and Acquisitions: A Dangerous Game

Magazine article Global Finance

Mergers and Acquisitions: A Dangerous Game

Article excerpt

EUROPE

With the pace of corporate M&A showing no signs of abating, a study of more than 200 European deals In the past two years Indicates that few mergers-just 9%, In fact-are deemed to be "completely successful." According to Thomson Financial, last year M&A deals in Europe topped $1.35 trillion, and this trend shows no signs of abating, with a number of deals being negotiated between companies in the banking and financial services space as well as private equity firms raising the competitive stakes in cross-border M&A.

The "ballooning" M&A trend is driven by companies' appetite for system consolidation and financial economies of scale. Yet, according to consulting firm Hay Group, most companies are not extracting maximum value from M&A deals because they are failing to measure "Intangible assets" such as the Impact on human capital, business culture and corporate governance.

Hay Group's report, entitled Dangerous Liaisons: Mergers and Acquisitions-The Integration Game, found that more than 90% of corporate mergers and acquisitions fell short of expectations because of companies' overemphasis on financial and systems due diligence. …

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