Merger gains may have a short shelf life, Commerzbank said, with the merger only temporarily offsetting an inevitable decline. The problem, he said, was that little empirical evidence existed as to the success of merger and acquisition activity. Deutsche Telekoms Ron Sommer looks for ways to create value Crucial to success, Commerzbank said, is knowing why you are merging. Chief executive Ron Sommer is looking for overseas partners to help it recoup its losses. The value delivered by cutting costs has to be offset against the cost of the acquisition to assess how much money has been made.
Mergers born out of defensive reasons are unlikely to fare well.
The important thing in a merger is to make it crystal clear who is going to lead the operation. He used the example of the recent battle to gain control of Telecom Italia. With Deutsche Telekom and Telecom Italia, there was great talk about two chief executive officers working side by side. These were two very opinionated, dynamic individuals. In the end when shareholders opted for the bid from Olivetti's Roberto Colaninno, Telecom Italia's chief executive Franco Bernabe had to leave.