The role of business combinations, including mergers, acquisitions, joint ventures and strategic alliances in restructuring industries and companies was a -- if not the - business trend story of the 1990s. Since 1990, the worldwide value of merger and acquisition (M&A) transactions has increased over six times to US$3.4 trillion in 1999, according to Securities Data Corp., and the number of transactions has increased by 2.5 times to over 30,000.

The drivers behind business combinations vary significantly depending on the industry and the company. But they can be distilled into a few major categories: strategic positioning, deregulation, achieving competitive size, gaining market share, consolidating resources through improved supply chain control, cost reduction and new product/technology acquisitions. Many mergers and acquisitions have their seeds in strategic alliances and joint ventures. But the ultimate driver for this activity is ostensibly enhancing shareholder value.

Wither Shareholder Value?
Studies conducted by academics and other parties during the past two decades indicate that increased shareholder value is not a consistent result of a merger or an acquisition. More recent studies conclude that approximately 50 percent of mergers and acquisitions do not produce returns in excess of industry peers. In fact, the empirical evidence seems to indicate that a merger or acquisition can actually destroy value. Investors now are more discerning in acquiring stock in publicly traded companies involved in a merger or acquisition, because they understand that the process is inherently risky.

Given this environment, executives are increasingly focused on how to make a merger or acquisition financially successful. Significant resources are routinely funneled into pre-transaction due diligence and integration activities. Unfortunately, corporate real estate (CRE) does not always receive the proper emphasis even though it represents a significant portion of the balance sheet and operating expenses. Consequently, corporate real estate frequently does not make an optimal contribution in supporting the success of a merger or acquisition.