M&A Paradox

mergers-acquisitions-2014-trends-and-developments

Author and Contributor

Musunuru M. Chanakya

Following the findings that the rate of failures is at least 50 percent, it can be expected that senior managers and boards of directors would avoid merger and acquisitions. However, in reality the trend continues towards mergers and acquisitions constantly increasing over the past 20 years.”

This Article introduces topics from the book, A Comprehensive Guide to Mergers & Acquisitions: Managing the Critical Success Factors Across Every Stage of the M&A Process, which covers the critical success factors across every stage of the process, including planning, screening, negotiation, due diligence etc… in order to analyze the above the statement quoted above.

The main drivers for any M&A relate to various growth opportunities such as acquiring new products, expansion into new geographical areas, or access to new customers. This is in addition to such motives as improving profitability and the company’s strategic capabilities and positioning. Thus, there is no surprise that the activity of M&A in 2011 showed continued recovery from the downturn of 2008 and 2009.

Many research studies conducted over the decades clearly show that the rate of failures is at least 50 percent. Following these findings, it can be expected that senior managers and boards of directors would avoid merger and acquisition activities as much as possible and would search for other strategies to achieve market share and profitability goals. However, in reality the trend continues towards mergers and acquisitions constantly increasing over the past 20 years. Global M&A deal volume increased drastically from 2010 to 2012.

The sharp increase in M&A activities during the years on one hand, and the tremendous amount of failures on the other hand, draw research interests from different areas of business administration and economics. Even if the number of mergers and acquisitions declines in the next few years, it is clear that this strategy will continue to remain important to many organizations. Yet, the future seems bright for M&A. According to a survey report of financial market professionals made by Bloomberg, the M&A activity will continue to grow, majorly in Asia-Pacific companies. In addition, the increase of international activities and processes of globalization will encourage international mergers and acquisitions and processes of globalisation will encourage international mergers and acquisitions.

Photo Source: http://corporize.com/event/2014/mergers-acquisitions-2014-trends-and-developments

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