Do Mergers and Acquisitions Add Value?

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Student (University), Cameroon

Do Mergers and Acquisitions Add Value?

As a theory it is expected that the value of the two firms after merging should rise. But this is often not the case in real life. Why?

  Slava Morozov
Analyst, Russian Federation

Why Mergers and Acquisitions Often Do Not Add Value

1. Even the most careful due diligence may not guarantee that there will be no bottlenecks in manufacturing and business processes.
2. Also you have to overcome initial aversion of personnel.
3. Finally the implementation into your structure may take years.

  Miguel Chavez Olivares
Consultant, Mexico

Arithmetical Bussiness Its not the Same as Arithmetical System

In the sum of two natural numbers, two plus two will always be four.
But merging two firms is not an algebraic sum.
If in the implementing for the merge of two firms, the negative parts are not addressed, optimized or redesigned, the result of eighty plus eighty could be fifty, or even less.

  Tuaneri Akoto, MBA, FCMI
CEO, United Kingdom

Do Mergers and Acquisitions Add Value

As with most theories practice often differs from the theory that underpins or attempts to predict or describe reality. Merger theories generally talk about the benefits of a merger. However, the human element is often lacking in consideration.
Human interaction or lack of it is a major factor in why mergers do not work. A merger can take place with the expectation that value will be created from the combining of firms. However, the employees might not get along with each other, one firm might see the other as a threat to their employment in weeks or months to come, there might be a huge difference in workplace culture, there could be different management styles,
Human interaction is an imperative to be assessed as part of due diligence. This can be the most important factor in the success and added value in a merger/acquisition. If the workforce do not get on, if there is wide spread personality clashes, if there are differences of perspectives and how things should be done then value is not added.

Management Consultant, Kenya

Effect of Acquisitions on Performance of Organizations

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