564 Making Key Strategic Decisions
today. An auto manufacturer acquiring an ice cream producer would be
an example.Armed with a basic understanding of the types of acquisitions and how
they occur, we now turn our attention to the track record of M&A transactions.
Be forewarned that it is spotty at best and that many practitioners, analysts, and
academics believe that the odds are stacked against acquirers. We do not say this
to dissuade anyone from pursuing an acquisition strategy, but rather to highlight
the fact that without careful planning, there is little chance of success.
THE TRACK RECORD OF MERGERS AND ACQUISITIONS
There has been tremendous growth in the number and dollar value of M&A
transactions over the last two decades (see Exhibit 17.1). In 1998, the total an-
nual value of completed transactions exceeded one trillion dollars for the first
time in history. The number of deals fell in 1999, but larger deals resulted in a
total deal value of almost $1.5 trillion. Exhibit 17.2 lists the largest deal for
each of the years between 1990 and 2000.
While the data in Exhibits 17.1 and 17.2 focus on large transactions, the
growth trend for all M&A deals is similar. And in 1999, for the first time in
history, there were more deals done abroad than in the United States. By any
SOURCE:The Wall Street Journal,December 20, 2000.