Anecdotal evidence suggests that 80% of all Corporate Mergers and Acquisitions do not achieve their objective and most actually result in a decline in the value of the Acquiring Company. Yet seldom if ever are there consequences for the proponents of the Acquisition. Why is there this strange state of affairs?
The latest victim of this malaise is that of Brian Joffe at Bidvest. It has now been admitted that Bidvest will have to write down its recent acquisition of Adcock Ingram by a huge R1 billion. How could somebody as astute as Brian Joffe have got the sums so wrong? What happened to the due diligence and possibly more importantly, the synergies and savings anticipated to be generated by the acquisition?