Mergers and acquisitions are extremely difficult. Expected synergy values may not be realized and therefore, the merger is considered a failure. Some of the reasons behind failed mergers are:

Poor strategic fit - The two companies have strategies and objectives that are too different and they conflict with one another.

Cultural and Social Differences - It has been said that most problems can be traced to "people problems." If the two companies have wide differences in cultures, then synergy values can be very elusive.

Incomplete and Inadequate Due Diligence - Due diligence is the "watchdog" within the M & A Process. If you fail tolet the watchdog do his job, you are in for some serious problems within the M & A Process.

Poorly Managed Integration - The integration of two companies requires a very high level of quality management. In the words of one CEO, "give me some people who know the drill." Integration is often poorly managed with little planning and design. As a result, implementation fails.

Paying too Much - In today's merger frenzy world, it is not unusual for the acquiring company to pay a premium for the Target Company. Premiums are paid based on expectations of synergies. However, if synergies are not realized, then the premium paid to acquire the target is never recouped.

Overly Optimistic - If the acquiring company is too optimistic in its projections about the Target Company, then bad decisions will be made within the M & A Process. An overly optimistic forecast or conclusion about a critical issue can lead to a failed merger.

We should also recognize some cold hard facts about mergers and acquisitions. In the book The Complete Guide to Mergers and Acquisitions, the authors Timothy J. Galpin and Mark Herndon point out the following:

- Synergies projected for M & A's are not achieved in 70% of cases.

- Just 23% of all M & A's will earn their cost of capital.

- In the first six months of a merger, productivity may fall by as much as 50%.

- The average financial performance of a newly merged company is graded as C - by the respective Managers.

 In acquired companies, 47% of the executives will leave the first year and 75% will leave within the first three years of the merger.