Handbook of Research on Mergers and Acquisitions
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Handbook of Research on Mergers and Acquisitions

Edited by Yaakov Weber

For the last four decades, researchers in various disciplines have been trying to explain the enduring paradox of the growing activity and volume of mergers and acquisitions (M & A) versus the high failure rate of M & A. This Handbook will stimulate scholars to focus on new research directions.
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Chapter 6: Merger and acquisition outcomes – is it meaningful to talk about high failure rates?

Annette Risberg and Olimpia Meglio


The above statement well synthesizes the conventional discourse about mergers and acquisitions: they experience high failure rates. This view represents an enduring issue for merger and acquisition scholars ever since Kitching, as early as 1967, aimed at answering the question of why mergers and acquisitions miscarry. One finds claims of up to 50 percent merger and acquisition failure rates in academic studies (for example, Buckley and Ghauri, 2002; Cartwright, 1998, Hubbard, 1999; Hunt, 1990; Shrivastava, 1986); the same finding appears in more practitioner-oriented literature (Habeck et al., 2000). Where do these numbers come from? Is this claim a fact or simply a taken-for-granted statement regarding mergers and acquisitions? The impressive number of studies offering numerical data on poor-performing mergers and acquisitions would imply that the statement is a fact. However, a deeper analysis of this literature shows that frequently the academic scholars making these claims are not actually conducting empirical studies on merger and acquisition performance. Rather their statements about failure seem to be a means of justifying the study at hand – studies which are generally not about performance or outcome but about other issues connected to merger and acquisition processes (for example, Appelbaum et al., 2000b; Appelbaum et al., 2000a; Bourantas and Nicandrou, 1998; Cartwright and Cooper, 1995; Child et al., 2001; DiGeorgio, 2002; Marks and Mirvis, 2001; Panchal and Cartwright, 2001; Very and Schweiger, 2001) (see Risberg, 2012, for further discussion).

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