Leadership failing post-deal mergers – Hay Group

Mergers and acquisitions across Europe are failing to deliver on their strategic objectives due to a lack of leadership, according to new research released by management consultancy Hay Group.

Hay analysed more than 200 European M&As since 2003 for Dangerous Liaisons: M&A – The Integration Game. The report revealed that merging organisations fail to appoint a new management team for an average of 74 days.

The delay is leaving newly merged businesses leaderless and lacking strategic direction for two and a half months. The research found that the repercussions continue long after this period, with mergers typically disrupting operations for more than two and a half years.

As a result, one in four firms studied had yet to achieve complete integration up to three years after the deal was completed. Among those firms that had completed integration, the average time taken was more than a year and a half.

Hay also discovered that mergers are falling short of their strategic aims, with a staggering 91 per cent failing to deliver the objectives behind the deals. Almost three quarters (78 per cent) of deals studied were yet to generate significant new value.

Hay director David Derain said leadership is the vital missing link in European M&As when integrating merging organisations effectively.

“The lesson for corporate mergers is clear. Leadership needs to be a key focus of the due diligence process before the deal goes live and given the highest priority once the integration process begins, if M&As are to prove successful.”

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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