The Board’s Role in Overseeing Acquisitions

As companies spend more than $2 trillion every year on acquisitions, many studies peg the rate of failure of these transactions in fulfilling expectations somewhere between 70 and 90 percent. Such performance is unacceptable in just about any endeavor. However, over time old lessons in mergers and acquisitions (M&A) failures continue to be relearned by many companies.

The question arises as to the board of director’s risk oversight role in overseeing the process of screening, selecting and pursuing M&A candidates, closing M&A transactions, and integrating merged and acquired entities, with emphasis on reducing risk in M&A activity. This issue of Board Perspectives: Risk Oversight analyzes the board's risk oversight role from an acquiring company's perspective.