Study Shows Challenges Remain for Acquirers in M&A Deals. Read on to Learn More.

New findings from KPMG reveal that despite a rebound in global M&A activity, the odds of success are still stacked against acquirers. The research, which analyzed over 3,000 public-to-public M&A deals valued above $100 million between 2012 and 2022, found that 57.2 percent of acquirers ended up destroying shareholder value, even though many deals seemed promising before closing. It was noted that while some deals generated an average of 13.2 percent in total shareholder return above the relevant S&P sector index leading up to closing, this figure dropped by an average of 7.4 percent in the two years following the deal.

The study pinpointed two main reasons for the erosion of value in failed deals: the overestimation of synergies and the underestimation of integration complexity. Deals that ultimately destroyed value tended to overestimate the benefits, resulting in overpayment, and failed to operationalize the gains they had projected. On the other hand, successful acquirers, approximately 42.8 percent of deals, were able to unlock meaningful synergies by employing a disciplined pre-deal strategy, early integration planning, and experienced deal teams capable of navigating complexity.

According to KPMG, winning acquirers embed value creation throughout the entire deal cycle and begin planning for integration earlier when relevant, applying a “value-focused, multi-perspective, integrated diligence” model. Such firms treat M&A as a leadership exercise rather than just a financial transaction, aligning their people, clarifying their strategy, and orchestrating integration before the ink is even dry. The report also highlights habitual acquirers as predictors of success, as firms that have completed more than five transactions in a decade experienced significantly better long-term outcomes.

In contrast, diversification-driven deals tended to underperform, with vertical or scale-focused mergers outperforming diversification-driven deals in long-term value creation. Successful deals were characterized by clarity of purpose and operational familiarity, which were essential for realizing synergies. The same principle applied to leadership, as M&A is a skill that can be honed over time, with firms that have institutional muscle memory being more likely to succeed.

Integration was identified as a critical stage in the M&A process, with value creation happening – or collapsing – after the deal is closed. KPMG emphasized the importance of dedicated integration teams, detailed 100-day plans, and clear leadership accountability, highlighting that failure to align leadership was a significant driver of value leakage. The need to retain key talent through tailored retention programs and the strategic advantage of post-close alignment were also underscored. Ultimately, successful M&A deals were not just about financial models but about converting them into results through leadership continuity and cultural integration.