Preface
Mergers and acquisitions (M&A) are an integral component of the growth strategy of many corporations. M&A often allows companies to achieve more rapid growth relative to what they would experience through internal or organic processes. However, that growth comes with a price.
The risks that come with M&A are often poorly understood and underestimated. Too often only the potential benefits of a deal are considered while the risks tend to be downplayed. This leads to companies overvaluing targets and paying premiums that are too high.
For many companies M&A has been the key to their success. For example, Cisco and Johnson & Johnson would not be the great successes they are without their M&A programs. In addition, because these companies have done so many deals, they have sharpened their ability to identify valuable targets and to integrate them into the overall company after the deal. However, even for such experienced acquirers there are significant M&A failures.
M&A is one of the most researched fields of finance. A rich body of high-quality, pragmatic research studies have explored all aspects of M&A. For example, many studies have explored the impact of M&A on acquirers and targets and have shed light on which types of deals are value enhancing and which are wealth destroyers. Another large body of research literature has explored many aspects of corporate governance as it relates to M&A success or failure. These are just a couple of examples of the bountiful supply ...
