These findings are based on a study of the 500 largest cross-border deals struck between 1996 and 1998. Most were found to have destroyed value for shareholders in the short term and many are now trying to sell these businesses, according to the accounting firm.
Further, two thirds of the companies bought between 1996 and 1998 are still not fully integrated, according to KPMG’s study.
“The 1990s ‘urge to merge’ has created a huge hangover of unfinished business,” comments John Kelly, head of M&A integration at KPMG Consulting.
M&A activity has fallen to its lowest level in a decade, and the volume of companies looking to sell recently acquired businesses, coupled with the collapse of Enron, a highly acquisitive firm, has prompted investors to question the benefits of these buying and selling sprees, KPMG notes.
Recent examples include:
- UK engineering group Invensys
- US conglomerate Tyco, which is splitting into four pieces
- telecom groups such as AT&T and British Telecommunications