Many of the world’s largest and most successful businesses have been built by mergers and acquisitions. From Sinopec to Facebook, Pfizer to Mizuho, Time Warner to Unilever, M&A has been a crucial contributor to the success of each business. But of course the reverse is also true – some of the world’s largest and most disastrous corporate failures have been brought about by ill-conceived, ill-timed, or poorly executed transactions.
Chroniclers are fond of reminding us that history repeats itself. This seems as true in the corporate world as anywhere else, no doubt because many of the lessons of recent events are so often ignored.
With the world economy already a decade into the low growth era, boards and executive teams are under more pressure than ever to buy their way out of the financial doldrums. Meanwhile the cost of debt is at 5000 year lows, and equity markets are not far from all time highs, making both transformational and catastrophic acquisitions easier than ever to finance. With these exceptionally difficult choices in mind, we’ve looked back over the last thirty years of M&A to identify the root causes of the more epic disasters. These are the Seven Deadly Sins of M&A: the warning signs that boards, CEOs and advisors can and must look out for in the year ahead. Read on...