MIT Sloan Management Review Article on Beat the Odds in M&A Turnarounds

While M&A deals and turnarounds are individually hard to pull off, combining the two can be even more challenging. Yet based on our research, including an analysis of roughly 1,400 M&A-based turnarounds between 2005 and 2018 in which the target had experienced a drop in performance before acquisition, we have identified six factors that can help acquiring companies improve their odds of success.

In the current business environment, M&A and turnarounds are both increasingly important. Let’s start with M&A. As long-term growth rates trend downward in many economies, business leaders are turning to acquisitions to fuel growth. According to research by our colleagues at Boston Consulting Group, roughly 36,000 M&A deals were announced worldwide in 2017, about 6,500 more than the long-term annual average.1 That trend continued into 2018, when the total value of transactions fell just shy of the record set in 2007.2 However, research has consistently found that most of these deals fail to create value,3 and our analysis supports that.