Mercury News Columnist Chris O'Brien warns Beware the hype around mergers! O'Brien catalogs the many failed that ultimately ended in divestitures in the tech sector in recent years citing data provided by PricewaterhouseCoopers' Bryan McLaughlin, who estimated tha:

in the third quarter, which ended in September, about 40 percent of the acquisition deals involved some kind of divestiture, up from 25 percent for the same period one year ago. That is, companies weren't buying smaller, stand-alone outfits; they were buying essentially the castoffs of other companies.

And a recent survey by Pricewaterhouse found that 69 percent of the 215 companies polled expected divestiture activity to either stay the same or increase over the next year.

Many of these divestitures are the fruit of ill-considered acquisitions made over the past few years. This failure rate should come as a surprise to no one in the board room or executive cubicle. A few years ago, McKinsey & Co. published a study indicating that 70 percent of mergers failed to generate the expected returns. Hope, however, seems to spring eternal in boardrooms as companies keep making deals.

Let's try to keep these failure rates in mind as we see increased antitrust fervor about blocking or otherwise restricting or simply bogging down mergers. The truth is that most mergers don't work out in the end. But that's an argument against aggressive antitrust enforcement scratch that intervention, rather than for it, because some mergers do create great value for consumers through greater efficiencies and government bureaucrats are unlikely to be able to guess which are which. If they could, they'd be making a fortune in the private sector advising companies how to avoid boneheaded deals! This problem is particularly acute in the tech sector, where today's leaders tend to become tomorrow's laggards because of the inevitability of disruptive innovation, which big companies manage poorly.