Why do Mergers and Acquisitions quite often Fail?

Chakravorty, Jayesh N.
May 2012
Advances in Management;May2012, Vol. 5 Issue 5, p21
Academic Journal
Corporate mergers and acquisitions (M & As) have become popular across the globe during the last two decades, thanks to globalization, liberalization, technological developments and intensely competitive business environment. The synergistic gains from M & As may result from more efficient management, economies of scale, more profitable use of assets, exploitation of market power, the use of complementary resources etc. Interestingly, the results of many empirical studies show that M & As fail to create value for the shareholders of acquirers. In this backdrop, the paper discusses the causes for the failure of M & As by drawing the results of the extant research.


Related Articles

  • Impact of Bank Mergers on Shareholders' Wealth: A Review of Literature. JUMA, Odero Naor; WAWIRE, Peter T.; BYARUHANGA, John; OKAKA, Ochieng; ODERA, Odhiambo // International Journal of Academic Research in Accounting, Financ;2012, Vol. 2 Issue 4, p163 

    The main motive of any Merger and Acquisitions (M&As) is to increase of the wealth for the shareholders which in turn forms the main goal of any firm. The main categories of motives identified include those that increase shareholder value and those that destroy shareholder value. Motives which...

  • Granada, Carlton merger gets shareholders' approval. Bennett, Ray; Pryor, Peter // Hollywood Reporter -- International Edition;1/20/2004, Vol. 382 Issue 11, p61 

    The final official acts have taken place for the dissolution of Great Britain broadcasters Carlton and Granada before their reconstitution on February 2, 2004 as ITV Plc. A meeting of Carlton shareholders saw the rubber-stamping of the £ 5.5 billion merger of the ITV giants before the floor...

  • CREATING OR DESTROYING VALUE THROUGH MERGERS AND ACQUISITIONS? Sehleanu, Mariana // Annals of the University of Oradea, Economic Science Series;2015, Vol. 24, p70 

    The avalanche of operations performed and their specificities revealed several motivations for mergers and acquisitions However, although they are concluded with the purpose of value creation, reality has shown that in many cases it was exactly the opposite, these transactions led to value...

  • FORM OF SUBSTANTIVE CONSOLIDATION OPINION.  // Business Lawyer;Feb2009, Vol. 64 Issue 2, p425 

    The article presents a form of substantive consolidation opinion, and also discusses substantive consolidation associated with bankruptcy. The form includes a discussion of the Certificate of Formation of the company, and the Limited Liability Company Agreement. It is stated that in substantive...

  • Leases: A Ticking Time Bomb in Your Company's Merger? STRAUSS, RICHARD E. // Real Estate Issues;2014, Vol. 39 Issue 2, p59 

    When buying or selling a business, there will likely be real estate tenant leases that are part of the business assets. For example, the leased premises may be an essential office location or plant. Implicit in the price may have been the buyers ability to use and exploit these key locations...

  • UK Competition Authority Codifies "Failing Firm" Defence to Mergers.  // Venulex Legal Summaries;2008 Q4, Special section p1 

    The article reports on the stand of the British Office of Fair Trading (OFT) on the failing firm defence in merger reviews. Such defence allows claims by the parties to a proposed merger that there is no relationship between the merger and the exit of one of the players, as well as concentration...

  • Analysts Predict Further Corporate Trust Consolidation. Walker, Susanne // Bond Buyer;8/20/2002, Vol. 341 Issue 31453, p5 

    Reports the proposal to acquire State Street Bank & Trust by U.S. Banks. Increase of merger and acquisition activity in the market; Recognition of the need for economies of scale by investors and key players; Trend on the consolidation of corporate trust business on investment banking.

  • Rentsure and Clientele sums. Basson, Deon // Finance Week;01/19/2001, p34 

    Focuses on the applicability of economies of scale to assurers in South Africa. Ways to fund the operating expenses and profits of large assurers; Need for assurers to add value for policyholders; Possibility of consolidation among small assurers.

  • Case built for more law firm mergers. Mcdonald, Michael // Crain's New York Business;03/12/2001, Vol. 17 Issue 11, p22 

    Reports the growing trend in global consolidation and merger of corporate law firms. Impact of the increased merger activity on medium-sized firms; Pursuance of law firms for economies of scale; Diversification of investment banking niche; Companies looking for merger partners in the city.


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics