Thursday, March 30, 2006

Mergers More Succesful than You Think

The old adage in corporate finance world is that many mergers fail, for some reason or another. Like the restaurant business, which is supposedly so brutal that 90% of restaurants fail, the M&A landscape is often thrashed for failing to produce deals that live up to initial expectations. Fairness opinions and projections say deals will work because of synergies and revenue enhancement opportunities, but all too often, reality can fall short.

That being said, a recent report from Booz Allen that our friends at Reuters write about says that mergers are actually becoming more successful upon closing. Why? Well the article says that buyers are becoming more disciplined, shareholders are asking more questions, and mergers are becoming more strategically justified (combining companies in the same industry, rather than prospective deals like the VNU - IMS debacle).

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