How Unsuccessful are Acquisitions?

What do we mean when we say an acquisition underperforms? Most managers have come across the statistic on acquisition performance — half to three-quarters fail. But what does it really tell us? Apart from acting as a warning to would-be acquirers, by itself it says very little. If the statistic is to have any practical value, we need to know more about how it has been arrived at. In particular we need to know the following: What is meant by an acquisition failing? By how much do acquisitions fail? How is performance measured? What specific causes of failure have been identified? These are highly complex questions. Teams of researchers throughout the world have been investigating them for decades and have not come up with a consistent set of answers. But they have given us the next best thing — clusters of answers which reflect the researchers’ academic disciplines. Each of the disciplines (mainly finance, economics and strategy) acts like a lens illuminating different aspects of the acquisition process. When these different perspectives and findings are put together, a composite picture emerges about acquisition performance which makes for uneasy reading.