Investigating Role of Optimism on M&A Outcome

Mergers, Acquisitions & Divestitures cause annual capital flow of trillions of dollars across national borders. They are high stakes & high emotion events for employees and all leaders associated with transaction. Research shows over 70% of M&A fail in primary objective of wealth creation. High failure rate is intriguing given all existing knowledge is applied from diligence to integration. We unearth a major gap in current body of knowledge, role of psychological capital. We investigate the impact of employee optimism and explanatory style on M&A outcome. We use deep learning to separate successful M&A from failed initiatives. This is first study globally that measures Positive Psychology variables and uses Deep Learning algorithms to predict M&A outcome. Our work is optimism audit and deep learning can presciently forecast M&A outcome. By measuring and influencing explanatory style & optimism, leaders can increase M&A success probability from 30% to 92%. Our work fills major process gap from M&A due diligence to integration.