There is a wealth of information out there condemning M+As as a waste of time and a first class ticket to failure. But with the news that Toy Story 4 will be hitting our cinema screens sometime over the next couple of years, I'm sure that Disney and Pixar aren't regretting their merger at all. Neither will Exxon and Mobil, who together have become the world's largest oil company.
These success stories show that profits can be attained from M+As - notwithstanding the fact that there remains a number of hurdles for companies to negotiate. From poor communication and governance to a lack of a common vision, there's plenty that can go wrong and, in truth, plenty that does go wrong.
Study after study indicates that 70% to 90% of M+As fail, which is an incredibly daunting rate for a company looking at M+As as a way of increasing their profitability. Much of this is to do with the partner that the company decides to merge or acquire with.
Often, executives fail to find suitable strategic partners for a deal, misunderstanding what the deal will bring to the company in terms of renewed growth or increased profits. Due to this, the integration process is gone about in an incorrect manner, resulting in the undesirable outcomes mentioned earlier in this article.
One of the biggest mergers that has seemingly been on the horizon for years is that of AOL and Yahoo. Having two fading giants coupled together doesn't seem worthwhile - the phrase; a problem shared is a problem halved may come to mind, but in this situation it doesn't seem sensible for AOL and Yahoo to burden each other with their problems. This is an example of merger not making sense.
The notion that you're destined to fail with a M+A is not true, it's just that the companies that make it work pay strict attention to the integration process and have a culture that is compatible with their newfound partner. You also need to have the financial resources to make the deal work, whilst always keeping ROI in mind. M+As do make sense and will continue to bear significant fruits for companies that work well together and have a compatible culture.