Companies that are avoiding mergers and acquisitions in an economic slowdown may be missing a major strategic opportunity. According to this study by the Corporate Development practice of The Boston Consulting Group (BCG), mergers that take place during periods of below-average economic growth have a higher likelihood of success. And they generate considerably more shareholder value, on average, than deals taking place during periods of above-average growth. The study analyzes 277 M&A transactions that took place in the United States between 1985 and 2000.

Skepticism about the value-creating potential of mergers and acquisitions is unwarranted, according to this BCG study. The report analyzes the 1993-2002 stock-market performance of 705 public U.S. companies, based on their level of Merger & Acquisition (M&A) activity. The highly acquisitive companies in the sample had the highest median total shareholder return-more than a full percentage point per year greater than that of companies that made few or no acquisitions. This report demonstrates that there is no inherent disadvantage to growth by acquisition. [BNET annotation]