Twenty years ago, consultants at Bain & Company published a book that explored a dispiriting reality: Although companies spent billions of dollars a year pursuing deals, 70% of mergers and acquisitions wound up as failures. The book, Mastering the Merger, was released in the wake of a series of corporate marriages that ended badly, including AOL and Time Warner, Daimler and Chrysler, and Citicorp and Travelers. This wasn’t a new phenomenon. Academic studies dating back to the 1970s had concluded that most acquisitions don’t play out the way the investment bankers promise. Even among deals that appeared profitable from investors’ perspective, Bain’s surveys of executives showed that many fell short of the internal projections made to justify the purchase.
A Better Approach to Mergers and Acquisitions
Far more mergers succeed today than in the past. Here’s how to post a win.
Justyna Stasik
Summary.
Twenty years ago, consultants at Bain & Company published a book that explored a dispiriting reality: Although companies spent billions of dollars a year pursuing deals, 70% of mergers and acquisitions wound up as failures.
But today those odds have inverted. According to new research by Bain, over the past 20 years firms have done more than 660,000 acquisitions, worth a total of $56 trillion, with deals reaching a peak in 2021. And close to 70% of them have succeeded. Even among the roughly 30% that were less successful, many of the deals still created some value.
What has changed? This article presents four explanations for the turnabout.
A version of this article appeared in the May–June 2024 issue of Harvard Business Review.