Friday, June 02, 2006

Bad News for M&A

Acquisitions - Only 30% Will Be Successful


For every 100 acquisitions made, only 30 will be successful. (P.F. Drucker)

These are not new numbers; they have been quoted for at least the past forty years. And rarely, maybe never, are they seriously challenged; they seem to be the common experience.

Much is talked (afterwards) about what was done or not done. But the root cause is rarely addressed.

The real reason why so many acquisitions fail, lies in what due diligence audits omit: They do not look at the most important part of the company - its Operating Dynamic; that which drives and impels future performance; no matter what the acquirer wants.

You know what the Operating Dynamic is of course, though you may not put that name to it. But, because you believe it is not measurable, not quantifiable, you must cross your fingers, and GUESS at its value. And your guess is always rosier than the truth.

You would NOT guess about the financials or the KPI's; these you would measure. But you do guess about the Operating Dynamic. And this means you pay more than you would if you knew - really knew - what it was.

This is no longer necessary. Since 1985 we have been measuring the Operating Dynamic of companies - in depth and in detail. And helping CEO's trigger profound changes in them.


Articles


The Post-Acquisition Due Diligence

The Corporate Polygraph

 

1 Comments:

At 8:05 AM, Anonymous www.idealsvdr.com said...

The real reason why so many acquisitions fail, lies in what due diligence audits omit: They do not look at the most important part of the company, its Operating Dynamic.

 

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