Mergers and Acquisitions: The Importance of Integration

Harbir Singh

Prof. Harbir Singh speaking at a Mack Center conference.

When it comes to moving a business forward, the biggest gains are often a hair’s breadth away from the greatest risks—a truth reflected in discouraging change success rate statistics.

A recent CNBC article highlights the even greater chance of defeat in the field of mergers and acquisitions, citing the Mack Center’s own co-director, Harbir Singh. According to a Knowledge@Wharton interview with Dr. Singh, mergers and acquisitions have a 60% failure rate—a fact that could potentially discourage opportunities for growth.

Nevertheless, the CNBC article “The Year of M&A? Beating the Odds of Failure” underscores the high number of CEOs who expect an acquisition in 2013, showing a robust optimism in an uncertain market.  In fact, the very existence of such hopefulness on the part of CEOs is promising. A study by UC Irvine’s Fabio Milani that looked at market booms and busts since 1970 found that “irrational optimism or pessimism, accounted for more than 50 percent of… fluctuations that occurred.”

That being said, more important than a healthy dose of optimism are efforts to integrate business cultures and personnel.  As Dr. Singh says in his interview “You’re entering a different organization with its own history, with its own culture.” These are exactly the kinds of considerations emphasized at the Mack Center—the necessity of strategic thinking and organizing for innovation in the face of rapid and disruptive change. This means that far from expecting a new acquisition to conform to the existing culture, CEOs must “win people over quickly,” as well as deliver on results.

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One comment on “Mergers and Acquisitions: The Importance of Integration
  1. Davidgomes says:

    Mergers and acquisitions also known as “M&A” is the procedure of consolidating or mixing two organizations into one corporation. A straight acquisition is simply when one organization buys another organization overall. Usually, this deal can be made in stock, cash or a mixture of both.

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