This expert file, written by Olivier Pujol, examines why so many mergers and acquisitions fail to achieve the expected result, even destroy value, and describes the mechanisms leading to repeated mistakes during an M&A exercise, the so called M&A curse....

Summary

Surveys show that, in average, mergers and acquisitions destroy value. Highly publicized successes are not sufficient to compensate for disastrous operations.

Yet, it is relatively easy to set the rules of good acquisition practices. M&A professionals know them well, but seem to keep breaking the rules: make acquisitions beyond the scope of their strategy, produce unrealistic business projections to accommodate for sellers exorbitant demands, or fail to implement integration plans.

The mechanisms leading to these repeated mistakes are powerful enough to overcome experience and wisdom; because M&A is a fascinating activity, with stakes far beyond simple efficient business; because closing an acquisition is a short term objective, and making it profitable is a long term activity. A matter of egos, passion and consistency over time.