Acquisitions can be a potent lever for strategic growth, and many companies are spending more per mergers and acquisitions (M&A) deal than ever before.1 Yet, capturing sustainable value from M&A can be as challenging as ever.
Our new report – ‘The M&A dance: Orchestrating synergies and value creation in public company acquisitions - examines value creation in public company mergers and acquisitions by analyzing total shareholder return (TSR) relative to the relevant index (e.g. S&P) — a market-adjusted metric that isolates deal performance from broader sector trends.
TSR movement is driven by a range of factors and dealspecific characteristics. Synergies — financial benefits arising directly from combining companies, such as revenue growth, cost reductions, or financing efficiencies — are a cornerstone of M&A value creation.
Additional drivers include strategic positioning (e.g. acquiring undervalued assets during market dislocations), unlocking latent value in a target’s standalone operations, and fulfilling corporate strategic objectives such as market entry or competitive insulation.
There were more than 3,000 public-to-public M&A deals over US$100 million in value between 2012 and 2022.1 Our research finds that 57.2 percent of acquirers ultimately destroyed shareholder value. Although many deals looked promising in the months leading up to closing — generating an average 13.2 percent in TSR above the relevant S&P sector index — TSR dropped an average of 7.4 percent in the two years following. The brutal reality: most of the initial gains evaporated soon after the ink dried.
This sobering data aligns with KPMG’s ongoing research, which shows a consistent struggle to realize and maintain post-merger synergies. Deals that destroy value often do so for two key reasons: acquirers overestimate the benefits, resulting in overpayment, and they fail to operationalize the gains they projected — particularly because integration and execution complexities are underestimated. These findings seek to encourage greater accountability: capital allocators should provide clear, quantified evidence that an acquisition can create value pre-deal — and rigorously track and communicate realized benefits to stakeholders post-deal.
Yet success is achievable: approximately 42.8 percent of deals succeed in unlocking meaningful synergies, underscoring that M&A can indeed be a path to sustained growth — when done right.
Read this report, as we unpick these findings, revisit why so many deals underdeliver and — most importantly — how certain acquirers beat the odds.
- Source: Capital IQ, KPMG Analysis
