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Merger/Acquisition Strategies – The Failure Ones?

by on February 10, 2010

Many organizations nowadays spend billion US dollars in order to advance their competitors. The competitions are so tough that a lot of organizations apply own-them-if-can’t-beat-them or dual-benefit strategies. The name of these strategies is replaced with Merger/Acquisition strategies. Nonetheless, many organizations still fail when taking over or doing partnership with their competitors. According to a report by Hay Group and Sorbonne, cited by CNN, in Europe, more than 90% merger / acquisition fail to reach their financial goals in post merger / acquisition period. If the rate is so high, there should be at least some common key indicators for these failures. What lessons can CEO learn from these key indicators?

In seeking to reveal the key indicators, the author examines some prominent case studies: Daimler-Chrysler, Sprint-Nextel, and America Online – Time Warner. Each of these case studies were profitable or on the track to be profitable. To aim at higher goals, the managers at these companies decided to merger or acquire the others. For certain managers, they could sense that somethings would be wrong with the merger/acquisition proposals. Yet, because of the promising successful future, they dared to bet the companies on the proposals. At the end, due to several reasons, these companies could no longer be together and decided to spin off from each other.

By looking at these case studies and summarize the key characters of the failures in each case, the author hopes to provide a frame work for CEOs-future-to-be to learn before proposing any merger/acquisition strategies.

Tien Nguyen

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