A REPUTATIONAL PERSPECTIVE ON MERGERS

Most mergers and acquisitions fail to achieve their financial objectives (Buono & Bowditch, 1989; Cartwright & Cooper, 1996). For example, only 12% of a sample of mergers and acquisitions managed to accelerate their average revenue growth significantly over the three years after the companies came together ( Bekier, Bogardus & Oldham, 2001 ). Yet there is no consensus as to the causes of this lack of success, which is surprising, particularly after the thousands of mergers that have occurred in the past and the acceleration in merger and acquisition activity up until recent times. The reasons given for failure often draw on a financial perspective, for example, that too high a price was paid by the aquisitor ( Daniel & Metcalf, 2001 ). But such explanations may cover other, more useful, insights into how mistakes can be avoided in the future and how the chances of success can be enhanced.