Most Mergers Benefit Companies, Economy

from the so-calm-down-everyone dept

In the past couple years people have had tons of fun making fun of the various megamergers that have happened. I’m a bit surprised at how quickly analysts rush to judge the success or failure of such deals – and there’s been a noted bias against any sort of major merger lately. However, a new study says that most mergers actually do quite well, increasing efficiency and profit for companies. Once again, it seems like this is an issue that comes down to execution. If there really are synergies between companies, it’s up to the management to bring them out successfully.

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Comments on “Most Mergers Benefit Companies, Economy”

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Steve Snyder says:

Umm no.

First and foremost, this “research” is from the Milken Institute. For those who quickly forget, the Institute is founded by Michael Milken. Yes that Michael Milken, junk bond king who was indicted and served jail time for securities fraud, racketeering, etc. He was barred from the securities business for life (which he then violated that and paid $42 million in fines). Quick Bio at

Second, this is the opposite of the Red Herring article you posted a few weeks back. Granted that focus on technology mergers, but the truth is, it pretty much applied to mergers in any faster moving industries.

Now to the article:
“In a detailed study of 276 acquisitions of publicly held Fortune 500 companies…” So we’re not talking about mergers here which don’t work. These are predominately big companies buying little companies–these usually do work well for the big companies–they get a few people or innovations and roll them into their own. They don’t work so well for the small companies, more often than not, the culture thing doesn’t work and the original employees either cash out and leave or are fired.

I’d also take issue with the quote, “a total savings of about $28 billion, even without signifigant layoffs.” No context to the layofs part, just that there were no signifigant layoffs. So there were no signifigant layoffs in any of those acquisitions? Bull. The fact is there were ton’s of layoffs among in the individual companies their “Top 100 mergers” list even if the aggregate numbers don’t completely reflect his–and the fact that the economy was experiencing record growth during the time 90% of these mergers took place was the only reason there weren’t a ton more.

steve snyder

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