Deconstructing A Myth: 'Most Mergers Fail'

With Kraft finally managing to acquire Cadbury for a hefty US$19.4bn, the spotlight is back on mega-deals. There have been twelve global M&A deals valued at US$1bn and above in the two weeks since 2010 began; this plethora of mega-deals is likely to re-launch the debate on the economic value created by M&A. Indeed, there is both a widespread perception and academic evidence that most deals do not create value. A case in point is the Royal Bank of Scotland (RBS)'s US$102bn acquisition of ABN Amro, which has been identified as a major factor in RBS' collapse during the crisis.

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