M+A: Success ratio lower than at Russion Roulette

The statement may seem to be a bit extreme but investors should be extremely cautious when assessing merger proposals in which a portfolio company is involved. This applies to investors in the bidder as well as in the target company. A win-win situation is highly unlikely and there will be one eventual winner (minus costs such as investment banking, legal and accounting feeds as well as integrating the business). All too often senior management falls in love with an idea or is egged on by advisers who are paid on completion only and therefore have no real stake in the ultimate success of the transaction. 'Independent' board members are anything but independent as they basically are creatures of the chief executive and in most cases nothing but an echo chamber for his 'vision'.
31/12/2010