Mergers: What Can Go Wrong and How to Prevent It (Wiley Finance) [Hardcover]

Patrick A. Gaughan (Author)

Book Description

Publication Date: April 28, 2005 | Series: Wiley Finance (Book 4)

A powerful guide for seeking out the best acquisition and merger targets
As increasingly more companies look to mergers and acquisitions (M&As) as a source of new growth and revenue, there is an even greater chance that these M&As will go bad. This insightful guide focuses on one of the most often debated and key issues in mergers and acquisitions-why some deals fail miserably and why others prosper. It provides a complete road map for what potential buyers should look for when picking a target and what characteristics of sellers they should steer clear of, as well as pitfalls to avoid during the M&A process. Real-world examples are provided of high-profile failures-Quaker Oats, United Airlines, Sears, and Mattel-and high-profile successes-General Electric and Cisco.
Patrick A. Gaughan (New York, NY) is President of Economatrix Research Associates and a professor of Economics and Finance at the College of Business, Fairleigh Dickinson University. He is actively engaged in the practice of business valuations for mergers and acquisitions, as well as other related applications.

Editorial Reviews

From the Inside Flap

As companies increasingly look to mergers and acquisitions as a source of new growth and revenue in today's competitive environment, it's vital to learn from the past and avoid costly merger mistakes. Company leaders need reliable answers to such questions as:

• Why do some mergers fail miserably while others prosper?
• Is there a common denominator for the failures?
• What role do CEOs play in the success/failure equation?
• Can businesses learn from merger mistakes?

Mergers: What Can Go Wrong and How to Prevent It answers these questions and more.

Complete with numerous real-world case histories of high-profile, high-stakes failures and successes, this book objectively analyzes previous mergers and explains:

• What potential buyers should look for when picking a target
• What potential buyers should look out for when picking a target—characteristics to steer clear of
• Pitfalls to avoid during the merger and acquisition process

Mergers identifies key characteristics of successful mergers by companies such as GE and Cisco, and it also provides pitfalls to avoid by examining mergers that failed, including AT&T, DaimlerChrysler, WorldCom, Quaker Oats, United Airlines, Sears, and Mattel. All research is illustrated with informative exhibits and tables to help readers grasp important concepts.

Mergers extracts important findings from a wide variety of pragmatic research that managers and directors can apply to avoid failed deals. Presented in an easy-to-understand manner, readers get the benefit of the bottom-line conclusions from years of research in this area. It also shows how companies should be valued so as to avoid overpaying. The book is a must-read for all those contemplating buying or merging with another company. In addition, the corporate governance of mergers and acquisitions is carefully analyzed.

If you're a CEO, CFO, COO, financial manager, consultant, or board member of a company that might be involved in a merger or acquisition; if you're a stockholder who wants to determine if a merger or acquisition is really in your best interest; if you're a businessperson who needs to understand mergers and acquisitions in order to better position or protect your company—this is a must-read! It's the risk-free way to learn from others' merger-related mistakes.

From the Back Cover

AT&T, WorldCom, DaimlerChrysler, Quaker Oats, United Airlines, Sears, and Mattel all did megabillion-dollar flops

These highly touted, high-profile mergers failed miserably. Even to most experts and advisors they looked good on paper. However, until now, it was hard to know exactly what to look for!

Mergers: What Can Go Wrong and How to Prevent It changes that. Noted authority Patrick Gaughan researches past merger successes and failures and zeros in on determining factors. He goes beyond the financials and strategies to examine the motives, the process, the laws, valuations, the role of corporate governance, and current trends in mergers.

If you're a CEO, COO, accountant, auditor, corporate attorney, consultant, director, or shareholder, this book keeps you from being swept up by merger-mania and tells you what to look for, and what to look out for, in mergers.

See all Editorial Reviews

Product Details

• Hardcover: 356 pages
• Publisher: Wiley; 1 edition (April 28, 2005)
• Language: English
• ISBN-10: 0471419001
• ISBN-13: 978-0471419006
• Product Dimensions: 6.3 x 1.2 x 9.4 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #1,102,802 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

2 of 2 people found the following review helpful:

5.0 out of 5 stars Why M&A deals go wrong and what to do about it., November 2, 2007

By 

Craig Matteson (Saline, MI) - See all my reviews
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This review is from: Mergers: What Can Go Wrong and How to Prevent It (Wiley Finance) (Hardcover)

I have read a lot of information about the whys and hows of going through the merger and acquisition process. This book provides valuable information about why these deals so often disappoint and almost never live up to the hype. Patrick Gaughan explains the basics of what mergers and acquisitions are, how they are justified, what the real reasons are that often drive the deals, and what goes wrong.

The explanations on CEO hubris, how faulty incentives in their compensation packages often drive bad deals, and how they often leave others to take the blame and clean up the mess. I particularly endorse the advice Gaughan gives about the board as a check on bad CEO behavior.

I also think that the discussion on methods of divestiture of bad deals is very good. Particularly the necessity of evaluating the impact on shareholder value before simply jumping into divesting the acquisition. That is, a bad deal is bad, but unwinding the bad deal might well be worse. You must be sure that the shareholders are better off after the divestiture.

When a company can get a stronger focus after getting away from the distractions of a bad acquisition, the returns often justify the divestiture. Gaughan also discusses the importance of considering strategic alliances and joint ventures before jumping into the M&A pool.

The author always provides good summaries of what recent research shows about every aspect of these deals. If I do have one nit to pick, it is that the language in the book is unnecessarily legalistic. Why in the world does the book even need one whereas? Faux formality impedes understanding and enjoyment of reading this great material. Really, the kind of academic formality in writing is just out of date. But this is a small fault.

1 of 1 people found the following review helpful:

4.0 out of 5 stars An honest and practical guide to M&A, November 21, 2008

By 

Rolf Dobelli "getAbstract" (Switzerland) - See all my reviews
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This review is from: Mergers: What Can Go Wrong and How to Prevent It (Wiley Finance) (Hardcover)

Many books deal with mergers and acquisitions (M&As) and how to conduct them; this one focuses primarily on the likelihood that your costly deal will fail. Patrick Gaughan tells you how to avoid bad deals, how to undo them, and what alternatives to consider before entering into an acquisition. The book is full of valuable and even interesting information, and Gaughan's experience on the legal side of the M&A process shows through - sometimes in the form of stilted language. getAbstract recommends this book to high-level executives, lawyers, and anyone else who stands a chance of getting involved in M&A activity.