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Tuesday, April 13, 2004

Should We Brace Ourselves for Another Era of M&A Value Destruction? by Jim Heskett Via HBSWK

Research tells us that the short-term value in an acquisition accrues primarily to shareholders of acquired companies. On the other hand, short-term value is more often destroyed than created for shareholders of acquiring organizations. There are conflicting conclusions about whether mergers and acquisitions contribute directly to long-term value for the surviving organizationWhat is generally agreed upon is that perhaps as many as two-thirds of all acquirers fail to achieve the benefits planned at the outset of an acquisition. In part, this is thought to be due to the fact that too many acquirers are more concerned about size and top-line growth than value creation. Others approach an acquisition like a conquering hoard, focusing on the numbers while remaining insensitive to the qualities and needs of the human resources being acquired. The article agrues through a structured well thought out approach mergers can meet stated objectives of merger initiatives.

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