What are reasons for failure of M&A?

A successful merger and acquisition should bring the company many values, increase market share and boost
profitability, encourage greater investment from synergies the change generates. But according the consultancy
KPMG’s research about mergers, there are about 83% of mergers to be failed. So, what the reasons for failure
of M&A is, this essay will show about them.

First of all, a common reason for the failure of M&A is a company overpaying for its acquisition. If it happens,
there is a real risk that the results will destroy shareholder value. This hampers the M&A from outset and may
lead to further turbulence, or the deal eventually collapsing.

One of the most importance the company have to notify is the fitness of cultures. This made many M&A failed
in the past. When there is a total clash of cultures and they cannot be good at communicating their strategy, it‘s
quite sure that there will large damages from this transaction. For instance, about eBay/ Skype acquisition,
where the more conservative management culture at eBay Clashed with Skype’s drive to greater
democratization of decision-making.

The time has to be right. There can be external economic factors affecting the marketplace which put mergers
and acquisitions at a disadvantage from the start like the end of the cycle of economic.

Finally, due diligence is essential in mergers and acquisitions, and its requires a good level of legal precision
and investigative dedication. Correct due diligence can ensure a buyer has a comprehensive overview of what
they are buying, including any potential risks. Without the correct due diligence, buyers are essentially buying
blind, putting themselves at risk of making perilous decisions without meaning to.

In conclusion, before any mergers and acquisitions, each company should be careful for every step themselves.
Should research markets, time, culture, make the most perfect plan to gain own targets.