Management blamed for high merger failure rate

HALF of all mergers and acquisitions fail to meet financial targets, according to a report published today. The study by Coopers & Lybrand, management consultants, found the most common cause of failure was management attitudes, writes Roger Trapp.

Eighty-five per cent of those responding to the survey mentioned such factors as different styles of management, cross-border cultural differences and resistance to change. Eighty per cent referred to little or no planning for the integration of the two organisations or too much time spent on this process.

Forty-five per cent blamed lack of knowledge of the industry or company being targeted and the same proportion blamed poor management.

The survey covered 50 acquisitions with a total value of more than pounds 13bn and was based on detailed interviews with senior executives of Times Top 100 companies. The findings echo those produced by studies carried out in the booms of 1973 and 1988 and so suggest that the success rate is unaffected by the economic climate.

More companies are coming to the stock market this year, according to figures from KPMG Corporate Finance. Sixteen came to the market during the first quarter, up from 12 in the same period last year. Companies including David Lloyd Leisure and Hambro Insurance Services raised a total of pounds 373m.

Neil Austin, KPMG's head of new issues, said: 'I am hopeful that this activity will continue to increase and that we shall see a return at least to 1991 levels of 91 new issues compared to 1992's 70.'