Merging firms left leaderless for two months

European mergers and acquisitions are failing as crucial leadership decisions suffer excessive delays

  • M&A disrupt company operations for over two years
  • Average merger takes 19 months to achieve integration
  • Just 1 deal in 10 delivers on strategic objectives

LONDON, United Kingdom — 18 February 2008: Research from global management consultancy Hay Group today reveals how European mergers and acquisitions are failing as crucial leadership decisions suffer excessive delays.

Hay Group’s report, Dangerous Liaisons: M&A – The Integration Game, reveals that merging organizations fail to appoint a new management team for an average of 74 days, according to senior managers with experience of M&As.

The delay is leaving newly merged businesses leaderless, and lacking strategic direction, for a worrying two and a half months.

Disturbingly, Hay Group’s research found that the repercussions continue to be felt long after this period, with mergers typically disrupting frontline operations for over two and a half years.

As a result, one in four firms (25 per cent) studied had yet to achieve complete integration up to three years after the deal was done. Among those firms which had completed integration, the average time taken was over a year and a half.

These delays are having costly results, according to Hay Group.

Corporate mergers are falling short of their strategic aims, with a staggering 91% failing to fully deliver the objectives which drove the deals in the first place, according to business leaders. Close to three quarters (78 per cent) of deals studied were yet to generate significant new value.

The research analysed over 200 major European M&As since 2003. Its findings will make sobering reading for firms caught up in the recent merger boom - which saw deals exceed €1.35 trillion1 during 2006 alone - as they struggle to integrate the firms they acquired.

David Derain, director within Hay Group who leads its M&A work in EMEA, commented: “Leadership is the vital missing link in European M&As. The capacity to effectively integrate merging organisations lies primarily with the top team.

“Our research underlines the need for speed: firms are taking too long to get the new management team in place, with a damaging effect on their business operations and ability to deliver.”

Lack of leadership focus
The study also exposes an alarming lack priority given to leadership issues among merging companies, during both pre-deal due diligence and post-M&A integration.

More than half (52 per cent) of buyer companies fail to review leadership capability as part of the due diligence process, while just a quarter make selecting a new management team a high priority post-M&A.

Critical success factor
Yet the research identifies the critical impact leadership has on overall success, employee productivity and company climate. Companies prioritizing a leadership review at due diligence stage were almost four times as successful at delivering their merger objectives.

Almost a fifth of these companies (19 per cent) stated that their transaction was completely successful. This is almost twice the average among the 200 deals studied, and compares to just 5% of firms which failed to carry out leadership due diligence.

In addition, companies conducting a leadership review reported employee motivation levels up by 10 per cent on average – while a quarter of firms failing to audit leadership capability witnessed a downturn in engagement levels.

Climate change
Over two thirds (67 per cent) of companies prioritizing leadership due diligence were satisfied with the post-merger climate of the new organization. Close to half (47 per cent) described the first 100 days as a ‘brave new world of opportunity’, while a further fifth (20 per cent) experienced business as usual.

By contrast, almost half of organizations neglecting a leadership capability review encountered a destructive climate. A quarter (24 per cent) described the new climate as ‘culture shock’, with the same proportion again going as far as to call it ‘trench warfare’.

David Derain commented: “The lesson for corporate mergers is clear. Leadership needs to be a key focus of the due diligence process before the deal goes live, and given the highest priority once the integration process begins, if M&As are to prove successful.”

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Further information
For more information, an executive summary of Hay Group’s Dangerous Liaisons report or an interview with David Derain, please contact:

Daryl Newman (
Vic Crook (
Rachel David (

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+ 44 (0)1273 763 911

Notes to editors

1 Thomson Financial reports €1.35 trillion in Europe, 2006.

Please note: this study should be credited to ‘global management consultancy Hay Group’, and not ‘Hay’ or ‘Hays’, which are separate and unrelated organisations.

About Dangerous Liaisons
Hay Group’s Dangerous Liaisons report combines the results of a three-pronged research programme. Firstly, interviews with 200 senior European business leaders who have experienced a major merger or acquisition during the past three years. Secondly, desk research into the 100 largest M&As to take place in Europe over the same period. Finally, qualitative research amongst 300 global employees of merging organisations conducted on behalf of Hay Group by The Sorbonne.

About Hay Group
Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organise people to be more effective, and motivate them to perform at their best. With 86 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. For more information, please visit