Big mergers and acquisitions make for splashy headlines, but do they make financial and strategic sense? Executives, board members, and investors are wise to be skeptical. Such deals—worth 30 percent or more of the acquirer’s market capitalization—are extremely complex. And as high-profile failures have demonstrated, big deals can destroy significant value for shareholders.

Big deals can create significant value for the acquirer, however, even if success takes time to unfold. Indeed, in our analysis of such deals over the past decade, half had created excess returns to shareholders when measured two years after the deal’s completion.¹ In one-third, returns were significantly higher relative to the industry average.