Why Mergers Fail

Poor employee communication during early transaction discussions usually results in failure.

Merger failure is quite common.  In this context, failure is defined as the combined entity not meeting the projected financial performance that was the basis for the merger.  Generally, the failure is caused by a double-edged sword:  Revenue does not increase, and cost reductions do not materialize as expected within the time frame anticipated.  When these factors occur, “corrective action” is often taken that worsens the situation.  The root cause, invariably, is poor employee communications during the early stages of the transaction discussions.