Poor integration puts M&A at risk
By Gabrielle Costa
The Age
More than three-quarters of mergers and acquisitions are dismal failures because predatory companies fail to ask basic, pertinent questions about the mechanics of integrating a new business into existing structures, according to human resources consultancy firm DDI.
Inadequate communication, poor leadership, inappropriate corporate structures and misaligned internal systems are some of the factors that result in 77 per cent of predatory companies failing to even recoup the costs of their investment - let alone improve their bottom line.
Ian Paterson, general manager of DDI, which has advised 75 per cent of Australia's top 100 companies, said that the 77 per cent failure rate for M&A was extracted from worldwide data but would probably be closely reflected in Australia.
His comments follow this week's release of research by Thomson Financial showing that, in 2003, mergers and acquisitions involving Australian companies had risen to almost $US70 billion ($A91 billion), up 66 per cent on 2002.
This comes after KPMG Corporate Finance forecast M&A activity would continue to strengthen this year as a result of sound economic fundamentals, economic stability and a strong sharemarket. "
