March 25, 2014
9 avenue Franklin D. Roosevelt
19:15 Program and Q&A
20:15 Networking Reception
Some Companies are More Equal than Others: Why Mergers Often Fail
Michael Gibbs, Clinical Professor of Economics; Faculty Director, Executive MBA Program, Chicago Booth
Mergers begin with great hopes for synergies, scale economies, access to new markets, and growth. Yet estimates are that more than half fail to live up to expectations—and many are eventually reversed. Why are so many mergers unsuccessful?
Professor Gibbs will discuss his research on mergers, focusing on post-merger integration. This step is often given short shrift during due diligence, but turns out to be the major challenge to a successful merger. In his work, he found that few mergers actually result in mixing of workforces from the two companies, and that there is substantial turnover of the workforce as a result of the merger.
This research has useful implications for thinking about mergers in practice. For example, mergers of unequal partners are likely to fare better than those of equals. Merger in name, but not in organization, is likely to yield fewer synergies but may be the practical solution in many cases. When implementing a merger, the dominant firm should probably act quickly and aggressively to take control and implement change in the other firm.
Join us for a practical look at mergers...beyond financial due diligence.