Shotgun mergers

I've been told that two out of three corporate mergers or acquisitions are financial failures. When paired with the heuristic that about half of all marriages end in divorce, it suggests either that M&A requires more care than the average Martain/Venutian mix or that corporate officers approach the task with no more commitment than Las Vegas lovers in a midnight chapel.

As with marriages, one of the most frustrating aspects of corporate M&A is the way it seems so easy for some and so challenging for others. Needham analyst Vik Grover reiterated his "strong buy" recommendation of Corvis stock after the company's acquisition of Focal Communications, announced in March, officially closed Wednesday. I still hear analysts clamoring to know more about Tellabs' relationship with Advanced Fibre Communications after their midsummer spat. Or how well Ciena is getting along with its various wives and girlfriends.

Sometimes it's a mixed blessing: Analysts and investors are throwing rice and toasting the plans for cost-cutting synergies in the union of ADC and Krone (see story below). But the overall profits reported recently have analysts worried that there are a few too many tin cans tied to the bumper.

In the case of both marriage and mergers, there seems to be a disconnect between the high risk involved and the frequency with which they are attempted. Of course, more than a few marriages and acquisitions are performed out of necessity rather than naïveté. (Sycamore Networks and Copper Mountain Networks are two of the latest companies to receive that dreaded call from Mom asking, "When are you going to settle down?") And more than a few CEOs have likely tied the knot while glancing nervously at shareholders and directors standing behind them like grim, shotgun-toting fathers-in-law.

Heard anything about the integration progress of any these recent mergers? E-mail me at egubbins@primediabusiness.com.