If most mergers fail why are they so popular?

Referring to past studies of merger activity using share value as the measure of performance, Michael Porter has stated that'.., no self-respecting executive would judge a corporate strategy this way'.(1) These previous studies have consistently shown that acquiring firms do not benefit from mergers. Yet mergers are more popular today than ever before. This study suggests that researchers have been using incorrect measures of merger performance, which accounts for their negative findings. The authors present a new methodology for measuring merger performance which recognizes the fact that managers have multiple motives, use 'key success factors', and evaluate mergers using various performance measures. The results of applying this new methodology to a small sample of Dutch mergers indicate that mergers are extremely successful. This suggests that managers and researchers can use this new approach to get a better idea of the impact of mergers on the acquiring firm's performance. (C) 1998 Elsevier Science Ltd. All rights reserved.