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Failed Mergers & Acquisitions

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Discuss the reasons why an M&A fails (technical and legal insolvency, and bankruptcy).
Once the failure of an M&A occurs, what happens to the assets of both companies?
Be sure to consider what happens to the:
1) stakeholders,
2) image of the company,
3) price per share,
4) market share, company assets,
5) company position in the industry,
6) goodwill,
7) service capability within the industry.

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Solution Summary

Discuss the reasons why an M&A fails (technical and legal insolvency, and bankruptcy).

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Major reasons for failure of M&A are:

1) Technology integration: A survey conducted by Pricewaterhousecoopers revealed that technology integration or integration of information systems is one of the major hurdles for a successful M&A and thus, a key reason for its failure.

2) Poor cultural fit: Lack of appropriate fit between the corporate culture of the two independent entities in the merged entity is often cited as one of the key reasons for failure. The lack of ability of the management of the merged entity to develop a shared corporate culture among the employees of two distinct entities lead to failure of the merger or acquisition. Poor cultural fit leads to conflict, confusion and clash of opinions which ultimately leads to failure of the merger.

3) Poor strategic fit among the merged entity is another ...

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