This book delves into the complexities of mergers and acquisitions, analyzing why most deals fail and how a select few succeed. The authors use a large dataset of 40,000 acquisitions to identify key factors influencing success or failure. They highlight the role of CEO overconfidence, flawed incentives, and inadequate due diligence. The book offers a practical scorecard to assess the likelihood of success before a deal is finalized. Ultimately, it advocates for a more cautious and data-driven approach to M&A.
Welcome to Strategy Skills episode 507, an interview with the authors of The M&A Failure Trap: Why Most Mergers and Acquisitions Fail and How the Few Succeed, Baruch Lev and Feng Gu.
In this episode, Baruch Lev and Feng Gu discuss the pitfalls of corporate acquisitions and the reasons why CEOs repeatedly make strategic errors that lead to costly mistakes. They argue that many acquisitions are driven by investor pressure and unrealistic expectations, with large deals often failing due to many factors including poor due diligence, lack of synergies, and talent retention challenges. Acquisitions should be a carefully considered last resort, not a knee-jerk strategic move.
Baruch Lev is a professor emeritus at NYU Stern School of Business, where he has taught and conducted research on mergers and acquisitions for decades. He worked formerly at UC Berkeley and the University of Chicago. His work has been widely cited in academic and professional circles (over 63,000 Google Scholar citations), and he is a leading authority on corporate finance and valuation.
Feng Gu is a professor of accounting at the University at Buffalo and has extensive experience in analyzing the financial aspects of corporate acquisitions. His research focuses on the economic consequences of corporate decisions and has been published in top-tier academic journals.
Get The M&A Failure Trap here: https://shorturl.at/YZydV
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