Companies around the world are on a shopping spree. Buoyed by years of sustained economic growth and low cost of debt, global appetite for mergers and acquisitions (M&As) is at a 10-year peak despite the simmering trade war between the United States and China. Last year, announced transaction volumes surged to $4.1 trillion, the third highest ever. Yet M&As also have a depressingly high failure rate of about 80%. Combine the buying frenzy with the post-deal outlook and you would have cause to ask: which M&As have the best odds of success?
The CEO and CFO Pairing That Makes Mergers More Successful
Research finds optimism and pessimism play an important role.
August 12, 2019
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Summary.
M&As also have a depressingly high failure rate of about 80%. Which ones have the best odds of success? An obvious place to look for the answer is the C-suite. CEOs shape strategies and often make final M&A decisions. They also consult their CFOs, who help identify acquisition targets, conduct due diligence, arrange financing, and engage in post-deal execution. Research shows that there is an optimal CEO-CFO combination that increases the odds of M&A success: optimistic CEOs tempered by pessimistic CFOs.