Michael Raynor, Ragu Gurumurthy and Mumtaz Ahmed with Jeff schulz and Rajiv Vaidyanathan

These [research] findings are in many ways consistent with both the conventional wisdom and the academic research on M&A. It is not uncommon to hear the refrain that acquisitions—especially larger ones—are systematically associated with lower profitability and lower shareholder returns for the acquiring firm. What we observe is that triple crown winners generate a mere 7 percent, on average, of their lifetime growth from M&A, while pure growth firms—which fail to deliver exceptional TSR or ROA performance—derive on average 46 percent of their growth from dealmaking. GT firms—companies with strong shareholder returns but less impressive profitability—split the difference, with an average of 22 percent of their growth coming from such sources.

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