Why company mergers usually fail

When markets are flying high, it’s easy to make the case for mergers and takeover bids. But be wary, says John Stepek.

895_MW_P18_strategy

Buying the store was the easy part
(Image credit: Photographs©2015 Barbara Ries. All rights reserved.)

Merger and acquisition (M&A) activity is picking up fast. A total of $1.2trn in deals was done globally in the first quarter of 2018, a record high in value terms (though not in terms of quantity). The pace shows no sign of slowing witness the proposed merger of supermarket giants Sainsbury and Asda, and now Clydesdale Bank's bid for Virgin Money.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.