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Figure Figure 1 Growth that compounds

European M&A failure rates by criterion

Failure rates across three objective criteria for European listed and private targets. Value destruction sits at roughly half on stock returns, drops to roughly one-third on operating cashflow, and is single-digit on divestments.

A horizontal bar chart showing failure rates of 773 European acquisitions across three criteria. For listed targets: 2-year BHAR failure is 51.7%, operating EBITDA benchmark failure is 38.4%, and divestment is 7.2%. For private targets: 2-year BHAR failure is 50.5%, operating benchmark failure is 31.4%, and divestment is 3.2%. Across criteria, failure sits roughly between 38% and 53%.204060802-Yr Shareholder Wealth (BHAR) · Listed51.72-Yr Shareholder Wealth (BHAR) · Private50.5Operating Benchmark (EBITDA) · Listed38.4Operating Benchmark (EBITDA) · Private31.4Target Divestment · Listed7.2Target Divestment · Private3.2Transactions classified as failed (%)
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Reference & Evidence

Source: Craninckx & Huyghebaert (2011), Table 3: 773 European M&A transactions (1997–2006): 401 listed-acquirer/listed-target deals and 372 listed-acquirer/private-target deals. Shareholder wealth measured via 2-year BHAR against size/BTM/momentum controls; operating performance benchmarked via Gugler et al. (2003) model; divestments tracked in Zephyr.

Each line is a claim from the register this journal publishes against, resolved from the register at build time.

  • A Sample A and Sample B, verbatim: "more than half (51.7%) of the transactions in Sample A destroyed shareholder value up to two years following deal completion", and in Sample B "50.5% of acquirers exhibit inferior stock performance" Craninckx & Huyghebaert (2011), Table 3 · CH11-C1
  • A "approximately 38.4% of these M&As resulted in an abnormal operating performance decrease during that window" for listed targets; "31.4% of firms realize inferior operating performance" for private ones Craninckx & Huyghebaert (2011), Table 3 · CH11-C2
  • A The divestment rate is the small one: "in only about 7.2% of the cases, the acquiring management decided to sell off a majority stake in the target after the deal was closed", against "about 3.2%" in the private-target sample Craninckx & Huyghebaert (2011), Table 3 · CH11-C3
  • A Across criteria, European M&A failure rates run "roughly between 38% and 53%" for listed targets Craninckx & Huyghebaert (2011), section 5 · CH11-C4

Grades: A, verified against the printed page of the primary source · B, primary source, text layer only · C, authoritative secondary · D, reported.

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