Harvard Business Review- M&A Complexity

Have you ever worked for a company that's acquired another, or that's been acquired? Given the worldwide volume of M&A activity, most managers would answer "yes" to that question. In 2009 alone, despite the recession and the credit crunch, 5,800 deals were announced, worth $2.3 trillion — and that was the lowest volume of M&A activity since 2004! Volume in 2010 is already significantly higher, with predictions that by the end of the year it will rise over 30%. Just in the last few weeks deals were announced by United Airlines (merging with Continental); GS Capital (buying Michael Foods); Abbott Labs (buying Piramal Healthcare); and dozens of others. In other words, no matter what the state of the economy, companies continue to merge and acquire as a pathway to growth and (hopefully) increased shareholder value.

One of the keys to creating value from an acquisition is to integrate the two companies in a way that makes it easy for people to do business both internally and with customers. But making that happen is easier said than done. Studies by various consulting firms and universities suggest that only 30% of completed M&A transactions actually pay off as expected — and one of the reasons is that too often the integration process creates complexity instead of simplicity.

http://blogs.hbr.org/ashkenas/2010/05/are-your-acquisitions-creating.html

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