Psychology of Mergers

Introduction

The numbers vary but most commentators agree that between 50 and 70% of mergers fail to achieve their objectives. Worse than that a KPMG survey of 700 mergers in 2004 showed that not only had the new entities failed to achieve the revenue and cost synergies by originally predicted but in many cases the merger had actually diluted shareholder value.

Recent research has indicated that in more than half of merger failures the root cause is a failure to attend to the people factors. Side-tracked by the strategic and structural considerations of systems and processes, the human dimension is at best poorly managed and at worst gets missed completely.

The purpose of this briefing paper is to address the human side of the merger process and create an understanding of the employees’ psychological and behavioural responses at each stage of the journey. This knowledge will enable organisations to...: