Report: Many Mergers Fail

More than half of global mergers fail to achieve their expected results, largely because of inadequate integration, a new Booz-Allen & Hamilton Inc. study revealed.

"Although senior executives devote exhaustive hours to striking the right deal, it is merely the beginning of the long and tortuous merger integration process," said the July 30 report, "Merger Integration: Delivering on the Promise."

Booz-Allen, based in McLean, Va., examined 78 deals worth more than $1 billion each between 1997 and 1998. The report found 53 percent of the deals failed to deliver their expected results.

Sixty-eight percent of mergers fail not because of flaws in strategy, but because of poor or clumsy integration. Loss of key staff, poor due diligence and delays in communications were named as factors.

By comparison, only 32 percent of the failures were attributed to faulty vision or poor fit.

The report recommended four key principles for successful merger integration: communicate a shared vision, seize defining moments to make explicit choices, simultaneously execute against competing critical imperatives and employ a rigorous integration planning process.