Merger and Acquisition Strategies

Merger and Acquisition Strategies

How to Create Value

New Perspectives on the Modern Corporation series

Angelo Dringoli

The decision to carry out a merger or acquisition is certainly a risky one, not least because of the number of variables influencing the final outcome. It is also a decision frequently based on the wrong objectives and an incorrect evaluation process. With this in mind, this important new book offers solutions for reducing the high percentage of mergers and acquisitions (M & As) that fail. It adopts a normative approach, using theoretical analysis to show what managers could and should do to increase shareholders’ value through successful M & A strategies. It also explores the conditions that are suitable for favouring a certain type of M & A (horizontal, vertical or diversified) over the others. In conclusion, the book presents case studies of successful M & A strategies providing a link between theory and practice.

Chapter 10: Conclusions: how to make M & As create value

Angelo Dringoli

Subjects: business and management, strategic management, economics and finance, industrial organisation


According to a considerable amount of empirical research, management’s personal interests, inaccurate evaluation of synergies and ineffective implementation result in generating an M & A failure rate of more than 50%. In the light of the poor performance of M & As, as empirical research showed, we have drawn up some managerial directives to make M & As successful. First of all, it is necessary that M & As be undertaken on correct and clear theoretical fundamentals. Certainly, M & A remains a very complex and difficult decision with high risk of failure, but it has not to be taken on generic expected strategic advantages and on supposed benefits of growth. It requires being driven by the objective of creating value for shareholders and it must be based on a deep analysis of the economic effects and cash flows produced over the long period. While it is not possible to cancel the risk of the investment, we think it is possible to reduce the risk of failure by carefully considering all the effects an M & A can produce on the shareholder value.

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