Prior studies indicate that a large number of mergers and acquisitions (M&As) fail to generate the expected return for acquirer shareholders, and that some of them even lead to substantial value destruction. We talked to Professor Dr. Nihat Aktas, who holds the Chair of Mergers and Acquisitions at WHU since 2013, about reasons and implications for companies.
Professor Dr. Aktas, can you explain why a large number of mergers and acquisitions fail?
A high share of mergers and acquisitions transactions fail because opportunities and risks are not analyzed and managed rigorously. M&As are an important growth strategy for firms. Since opportunities and risks are closely connected, M&As need to be strategically planned and carefully executed.
What do you recommend to companies to face these challenges?
First, companies need to have a clear strategy and well established merger motive. Then, they need to be able to master the mergers and acquisitions process – from idea origination through post-merger integration. Each step of the process (i.e., target screening, modeling synergies, valuation, negotiation, bidding, due diligence, deal closing, post-merger integration) is key to deliver shareholder value in the long run.
How can you achieve this?
For example, WHU offers an Executive Education program, in which executives and managers can learn about these aspects. The focus is first on understanding why it is important to implement M&As, and in which contexts M&As are a value-creating response to a firm’s growth challenges. The next step is to understand how to effectively and efficiently implement M&As.
Do I need any M&A experience to participate?
No, participants do not need to have prior M&A experience to join this program. The program is designed for board members that would like a quick refresher on M&A topics or for young talents and experienced managers who want to boost their career by advancing into a position with greater focus on strategy and corporate development in their firms.Our program is also well suited for senior executives whose firms are potential acquirers or targets for acquisition by another firm.
The "Mergers and Acquisitions in Practice Program" will take place on June 7-9, 2018 at WHU Campus Düsseldorf.