Half or more of the big mergers, acquisitions, and alliances you read about in the newspapers fail to create significant shareholder value, according to most of the research that McKinsey and others have undertaken into the market's reaction to announcements of major deals. For shareholders, the sad conclusion is that an average corporate-control transaction puts the market capitalization of their company at risk and delivers little or no value in return.

Managers could eschew corporate deals altogether. But the right course is to pursue them only when they make sense—in other words, to make sure that all of your deals are above average. Easily said, of course. But what, exactly, does an "above-average" deal look like? We decided to take that question to the stock market.

Our study examined the stock price movements, a few days before and after the announcement of a transaction, of companies involved in corporate deals. Using a multivariate linear regression, we tried to explain those movements in terms of several deal variables, such as deal size, industry, and deal type. Our experience with scores of corporate-control transactions has taught us that mergers, acquisitions, and alliances tend to serve some kinds of strategies better than...