Mergers and Acquisitions: Examining the M&A Ecosystem

It’s hard to name many business transactions that are as risky and complex as mergers and acquisitions (M&A).  Over 85% of M&A deals fail, according to a recent study on M&A outcomes by KPMG. Another study, by A.T. Kearney, found that the total return to shareholders on 115 global M&A transactions was negative 58%.  These astounding numbers are enough to make any organization think twice.

Still, when interviewed by the NY Times recently, Robert Kindler, global head of M&A at Morgan Stanley, responded that he is optimistic about the takeover market for the first time in years.  He stated, “When you have historically low interest rates, less volatile equity markets and stock trading at low forward multiples, that is when mergers and acquisitions are going to be active.”  Despite the grim statistics, there are many compelling reasons to attempt an M&A transaction, but they must be done with and understanding of the risks and challenges involved.