Making M&A work

The Aventis manager offers a practical guide to successful mergers and acquisitions.

Andreas Hinterhuber, an Aventis manager who has steered the integration process in the Asia-Pacific region, offers a practical guide to successful mergers and acquisitions.


A comparison of the stock market performance of the largest mergers and acquisitions in 1999 with the development of the S&P 500 index provides salutary reading for executives contemplating mergers and acquisitions (M&As). Merged companies – including Vodafone/ Airtouch and Mannesmann – not only significantly underperformed the S&P 500 index but have to date failed to create any significant value at all.

Broader research (summarised in Table 1) also suggests that the average merger is doomed to fail.

Our research into M&As produced two main findings:

First, most mergers fail because managers apply a set of apparently commonsense rules.

Second, outstanding “integrators” are able to create extraordinary growth in shareholder value, and employee and customer satisfaction by applying a set of apparently counterintuitive measures in M&A integration.

Accepted wisdom in M&A

Most executives implicitly follow a set of commonly held assumptions when merging or integrating two companies. The most widely spread assumptions are:

  • In-depth planning is a key requirement for success
  • Synergy realisation is a primary goal once the deal is closed
  • Early wins in integration – pick low-hanging fruit first
  • Integration managers are appointed for monitoring and implementation of synergies
  • Financial yardsticks are the best instrument to monitor the progress of integration activities

These practices appear commonsensical. Yet our research indicates that they lead many companies dangerously astray. Though apparently focused on the integration process, they ultimately distract companies from the grounds where the real battle for integration success is fought – the marketplace. This is the main reason why most mergers fail.

Outstanding M&A integrators

When we started to study the integration practices of some companies with immense acquisition experience such as GE, Cisco, Citigroup and others, a set of counterintuitive patterns began to emerge. Similar patterns surfaced when we studied the rare cases of successful mergers, such as Aventis. The implicit assumptions of managers responsible for integration within these companies were radically different in critical ways.

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