In a business climate marked by escalating global competition and industry disruption, successful mergers and acquisitions are increasingly vital to the growth and profitability of many corporations. If history is any guide, 60 to 70 per cent of new mergers will fail - and will destroy shareholder value. To date, analyses of the M&A failure rate tend to focus on individual causes - e.g., culture clashes, valuation methods, or CEO overconfidence - rather than examining the problem holistically. The Value Killers is the first book based on a holistic analysis of successful and unsuccessful transactions. Based on research, interviews with top executives, and case studies, this book identifies the key causes of failures and successes and offers prescriptions to increase the odds that future transactions will deliver all the anticipated synergies.
The Value Killers offers practical advice in the form of 5 Golden Rules. These rules will help managers and boards to ensure that target companies are properly valued; potential synergies and risks are identified in advance; checks and balances are installed to make sure that the pros and cons of the transaction are rationally and objectively evaluated; mechanisms are created that will trigger termination of bad deals; and obstacles to successful post-merger integrations are assessed (and solutions developed) before the deal closes. Each chapter includes questions for executives considering future M&As to allow them to see whether they are on the right track or not.



Nuno Fernandes is Dean of Cat?lica Lisbon School of Business and Economics, Portugal and Full Professor of Finance, and holds the Funda??o Am?lia de Mello Chair. He is also the Chairman of the Board of Auditors of the Portuguese Central Bank (Banco de Portugal), and Visiting Professor of Finance at IMD Business School. Before becoming Dean of Cat?lica Lisbon, he was, for a decade, Professor of Finance at IMD, in Lausanne, Switzerland. He was also a member of the Advisory Committee for the World Economic Forum. A specialist in corporate finance, international financial markets, and emerging market risks, Fernandes has been published in leading international academic journals, including the Journal of Financial Economics, Review of Financial Studies, Journal of International Business Studies , and the Journal of Portfolio Management . He speaks at business conferences in Asia, Europe, and North America, and is a regular contributor to The Financial Times and The Wall Street Journal . Fernandes advises companies and financial institutions in Asia, Europe, Latin America, and the Middle East on formulating winning financial strategies, investments, international valuations, M&As, and risk management. His work has earned recognition that includes the AEFIN prize and a grant from the FDIC (the U.S. regulator for financial institutions). In 2008, he received the Lamfalussy Fellowship from the European Central Bank.

1;Dedication;5 2;Acknowledgments;6 3;Contents;8 4;Introduction;10 4.1;The Enduring Allure of 2 + 2 = 5;12 4.2;Most Mergers Destroy Value;12 4.3;The Usual Suspects;13 4.4;The Road to Hell ...;15 4.5;The Five Golden Rules;16 5;1: Don't Rely on Investment Banks for Valuation;18 5.1;Where Were the External Advisers?;19 5.2;Winners and Losers;20 5.3;Alternatives to the Success Fee;21 5.4;The Benefits of In-House Valuations;23 5.5;Internal Teams Should Steer the M&A from A to Z;27 5.6;Summary;29 5.7;Questions for Executives Considering Future M&As;30 6;2: Avoid "Strategic" Deals;32 6.1;"Strategic" Is a Dangerous Word;34 6.2;Good and Bad Reasons for Doing Deals;36 6.3;Boards Can Prevent Bad Deals;39 6.4;It's Not the CEO's Job to Diversify the Company's Portfolio;42 6.5;Red Flags and Green Flags;43 6.6;Summary;45 6.7;Questions for Future M&As;46 7;3: Link the Before and After;48 7.1;Multiple Teams Can Produce Disappointing Results;50 7.2;Why Use Different Teams?;51 7.3;Wanted: Preparation and Follow-Through;52 7.4;Culture: The Universal Scapegoat;55 7.5;Insights from Successful Culture Warriors;57 7.6;Should Culture Ever Be a Deal Killer?;58 7.7;Culture Integration Solutions;59 7.8;Desired End State;63 7.9;Summary;64 7.10;Questions for Future M&As;65 8;4: Think Like a Financial Investor;67 8.1;Most Acquirers Overpay;68 8.2;What Would Gordon Gekko Do?;69 8.3;Identify Hard and Soft Synergies;74 8.4;Calculate the Target's Stand-Alone Value and the Value with Synergies;76 8.5;How Payment Methods Affect Deal Outcomes;78 8.6;Measures to Prevent Overpaying;81 8.7;Synergy Summits;82 8.8;Summary;83 8.9;Questions for Future M&As;84 9;5: Move Fast and Communicate Transparently;87 9.1;Higher Attrition Rates Can Last for Years;87 9.2;Speed and Effective Communication Are Imperative;88 9.3;For Employees, Bad News Is Often Better Than No News;89 9.4;Meet with New Customers ASAP;90 9.5;Use Your Time Wisely;93 9.6;Summary;93 9.7;Questions for Future M&As;94 10;6: Conclusion: Closing the Deal, But at What Price?;95 10.1;The Five Golden Rules: Key Messages;95 11;List of Case Studies/Companies;100 12;Index;101