Baruch Lev and Feng Gu on Data Driven Mergers and Why Most Deals Fail

Data Driven

Andy Leonard and Frank La Vigne are joined by experts Baruch Lev and Feng Gu to uncover the complexities and pitfalls of mergers and acquisitions. We'll discuss the controversial "killer acquisitions" in the pharmaceutical industry, which regulators fear stifle innovation and harm public health.

Our guests will share insights from their upcoming book, "The M&A Failure Trap," which critiques current acquisition strategies and introduces a unique 10-factor scorecard for assessing potential success. From data analysis on 40,000 mergers over 40 years to the challenges and market trends affecting merger outcomes, we’ll explore why up to 75% of mergers fail and how decision-makers often benefit at the expense of employees and shareholders.

Whether you're an entrepreneur looking to navigate M&As or a data enthusiast curious about the numbers behind these strategic moves, this episode offers a data-driven look at the forces shaping mergers and their real-world impacts.

Show Notes

The M&A Trap Book Link (no affiliate) https://www.amazon.com/Failure-Trap-Mergers-Acquisitions-Succeed/dp/1394204760

Highlights

00:00 Exploring data science, AI, mergers with experts.

04:43 Extensive data-driven analysis of mergers' failures.

09:22 Investment bankers pressure companies to finalize acquisitions.

11:15 Managers get bonuses for concluding acquisition deals.

14:26 Global economy affected; star performers leave.

17:32 Mergers often lead to employee departures, layoffs.

20:24 Managed data engineering team during Unisys acquisition.

26:28 Analogies highlight misapplication of causal thinking.

28:58 Complex model reveals hidden variable impact.

31:01 Correlation can mislead; avoid single-focus traps.

37:14 Comprehensive analysis of acquisitions and their impacts.

38:39 Analyzed LinkedIn data on employee turnover trends.

41:50 Creative metric developed for private acquisition premium.

46:01 Acquisitions are widespread, impacting various industries significantly.

52:11 Unique 10-factor acquisition scorecard predicts success.

55:45 Deep dive into mergers and acquisitions data.

Speaker Bios

Baruch Lev is a professor emeritus at NYU Stern School of Business, where he has taught and conducted research on mergers and acquisitions for decades. He worked formerly at UC Berkeley and the University of Chicago. His work has been widely cited in academic and professional circles (over 63,000 Google Scholar citations), and he is a leading authority on corporate finance and valuation.

Feng Gu is a professor of accounting at the University at Buffalo and has extensive experience in analyzing the financial aspects of corporate acquisitions. His research focuses on the economic consequences of corporate decisions and has been published in top-tier academic journals.