RICHARD TORTORIELLO

Despite the often-heard claim of M&A synergies, acquirers lag industry peers on a variety of fundamental metrics for an extended period following an acquisition. Profit margins, earnings growth, and return on capital all decline relative to peers, while interest expense rises, as debt soars, and other “special charges” increase…. Acquirers that grow quickly pre-acquisition often underperform post-acquisition. Acquirers with the highest pre-acquisition asset growth, underperform by 5.8% one year post-close and by 13.3% after three years, while those with the highest pre- acquisition increase in shares outstanding also underperform significantly.

Despite the often-heard claim of M&A synergies, acquirers lag industry peers on a variety of fundamental metrics for an extended period following an acquisition. Profit margins, earnings growth, and return on capital all decline relative to peers, while interest expense rises, as debt soars, and other “special charges” increase…. Acquirers that grow quickly pre-acquisition often underperform post-acquisition. Acquirers with the highest pre-acquisition asset growth, underperform by 5.8% one year post-close and by 13.3% after three years, while those with the highest pre- acquisition increase in shares outstanding also underperform significantly.