Executive Briefings

Companies Are Doing a Better Job of Integrating Mergers and Acquisitions, Conference Board Says

Most mergers and acquisitions fail to achieve their stated business goals. Now, with M&A transactions on the rebound since the last downturn in 2001-2002, companies are striving to improve their handling of the process, according to The Conference Board. In a new survey of 86 executives involved in mergers and acquisitions, the board says they are learning from their mistakes and successes. That's especially important with "serial acquirers"-companies that have based their growth on a continuing series of deals. Such entities are building new capabilities and tools in support of their integration processes, the report says. Avoiding a "one-size-fits-all" mentality, they are tailoring their practices to match the strategic intent, size of acquisition, and the target's specific industry and geography. The strategy is helping to make an often "overwhelming" process more transparent, The Conference Board says. The ability to communicate one's mission clearly and effectively helps to allay the political concerns that arise from nearly every merger or acquisition. Another key factor to success, the board says, is the degree of similarity between an acquirer and the target firm. In deals that worked out well, 93 percent of companies reported that their targets were either "completely" or "to a high degree" from the same industry. "The further you move away from your own business," the report says, "the more likely there will be an exponential increase in problems." Yet another conclusion of the report: M&A integrations are more successful for targets with more than $1bn in sales than for those with less than $100m.

Visit www.conference-board.org

Most mergers and acquisitions fail to achieve their stated business goals. Now, with M&A transactions on the rebound since the last downturn in 2001-2002, companies are striving to improve their handling of the process, according to The Conference Board. In a new survey of 86 executives involved in mergers and acquisitions, the board says they are learning from their mistakes and successes. That's especially important with "serial acquirers"-companies that have based their growth on a continuing series of deals. Such entities are building new capabilities and tools in support of their integration processes, the report says. Avoiding a "one-size-fits-all" mentality, they are tailoring their practices to match the strategic intent, size of acquisition, and the target's specific industry and geography. The strategy is helping to make an often "overwhelming" process more transparent, The Conference Board says. The ability to communicate one's mission clearly and effectively helps to allay the political concerns that arise from nearly every merger or acquisition. Another key factor to success, the board says, is the degree of similarity between an acquirer and the target firm. In deals that worked out well, 93 percent of companies reported that their targets were either "completely" or "to a high degree" from the same industry. "The further you move away from your own business," the report says, "the more likely there will be an exponential increase in problems." Yet another conclusion of the report: M&A integrations are more successful for targets with more than $1bn in sales than for those with less than $100m.

Visit www.conference-board.org