Brand mergers: A marriage of brand fit
Mergers run a high risk of failure if the parties involved do not fully understand how the respective brands and cultures will fit together, warns Terry Tyrrell
The body count of high-profile and now deceased mergers & acquisitions includes AOL-Time Warner, HP-Compaq, Alcatel-Lucent, Daimler Benz-Chrysler, Mattel-The Learning Company and Novell-WordPerfect, to name but a few.
Some mergers failed so spectacularly that the combined company went belly-up; others ensured the demise of their masterminds. Some companies struggled to reverse their fortunes but not without substantial cost, while others were simply bad ideas doomed from the outset.
According to some reports, up to 80% of M&As were considered disappointing, with the main reason being the deterioration of their stock market value. To start with, two-thirds of big mergers lose value on the stock market. Less than half the mergers created in the 1980s and 1990s have created value for shareholders, according to The Conference Board. Perhaps most shockingly, McKinsey & Co found that 80% of mergers don't earn back the costs of the deals themselves.