M&A Failure When Cash Isn’t a Factor

M&A Failure When Cash Isn’t a Factor

In 2013, 30 percent of brokered deals and 31 percent of investment bank deals fell through after a Letter of Intent was signed.  According to Pepperdine University’s Graziadio School of Business and Management, valuation gaps in pricing were the number one reason that M&A ventures failed.  This was followed closely by non-fiscal demands from either party that were deemed “unreasonable”.  Interestingly, economic uncertainty and a lack of capital were far less influential than they had been in years past.  If there is plenty of cash available, then why are so many deals failing to close?  Ilan Mochari shares the answers in an interesting article for Inc.com and ties them together with the classic riddle of Five Frogs on a Log.