M&A failures: Receivables and inventory may be key

✍ Scribed by James S. Sagner

• Book ID: 102299086
• Publisher: John Wiley and Sons
• Year: 2011
• Tongue: English
• Weight: 187 KB
• Volume: 23
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.21733

✦ Synopsis

Abstract

Researchers estimate that at least 75 percent of all merger‐and‐acquisition (M&A) deals fail to meet the expectations of the acquirer, of the acquiree, or of investment bankers. The reasons cited include incompatible management cultures, marketing strategies that do not mesh, overly optimistic financial projections, and more. But one critical factor in M&A—too often overlooked—is the accuracy of important current asset accounts, particularly accounts receivable and inventory. These concerns are often forgotten as investment bankers, accountants, and attorneys focus their attention on the “big picture” of the deal. This article examines these two current asset accounts, provides examples of problems that occurred in publicly held and private companies, and suggests specific metrics you can use to monitor receivables and inventory in takeover candidates. © 2012 Wiley Periodicals, Inc.