Merger and acquisition activity in Europe will accelerate as firms try to increase sector consolidation, a seminar organised by actuaries Watson Wyatt has been told. The survey of 123 European companies, including 16 Irish, showed that acquirers were looking for cost reductions as well as operational synergies.

Irish companies which responded to the survey said the key rationale for pursuing mergers and acquisitions was to achieve competitive size. Other factors included gaining market share, operational synergies, diversification, access to new markets and acquiring new technology and assets. Ms Amanda Wilson, of Watson Wyatt, said three-quarters of mergers and acquisitions were clearly disappointing or failing to meet pre-deal objectives.

"Half of the companies we have surveyed in Europe and North America reported an overall drop-off in productivity in the first four to eight months, while just 23 per cent of all acquisitions earn their cost of capital."