Executives list revenue growth as one of their primary goals in 80 percent of all merger announcements. Yet most of the time, it remains elusive. Merging companies typically focus on integration and cost cutting after the deal and neglect day-to-day business, thereby prompting nervous customers to flee. In one recent merger in the pulp and paper industry, for example, the acquirer was so preoccupied with the details of integration that it reacted sluggishly to a supplier during a routine review—and lost its biggest customer.

Indeed, in the three years following a merger, a mere 12 percent of companies grow more quickly than they had before.¹ Most sloths remain sloths, and many solid performers slow down. This loss of revenue momentum is one reason so many mergers fail to create value for shareholders. In our experience, coming up short on revenue targets after a merger has far more serious effects on the bottom line than failing to meet planned cost savings. In one merger, we found that offsetting a mere 1 percent decrease in revenue growth would require cost targets to be exceeded by 25 percent to justify the acquisition premium.² Since nearly half of all mergers fail...