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03 February 2015

A Reputational Perspective for the processes of M&A

The renewed investing interest in Spain is reactivating the M&A activity. However, it should be noted that just 12% of the M&A achieve their economic objectives (Davies and Chun). And this is not the result of legal or financial factors, but cultural problems that are mismanaged stemming from the perception that each of the organizations has in relation to its counterpart before, during and after the merger. 70% of the failed mergers are characterized by poor communication and several issues related to integration. The perception of “them and us” prevails for over six years after the merger.

Therefore, this article emphasizes on the importance of analyzing the reputation of both organizations, the known as reputational due diligence, which certain enterprises are starting to introduce into their business approach. This element is slowly becoming one of the main recommendations to ensure success after a merger.

Juan Cardona, Director of the Department of Corporate Reputation and Stakeholders Management of LLORENTE & CUENCA

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