In a one-of-its-kind study by the M&A Research Centre (MARC) at London's Cass Business School, it was found that it is not the price paid by the buyer that determines the future value of a merged business, but how well the buyer can successfully integrate the business.

The study - called The Good, The Bad And The Ugly: A Guide To M&A In Distressed Times - scanned 12,000 deals over the period from 1984 to 2004, to arrive at the conclusion. Researchers found that even though there can be a big leap in the short-term value of a bombed-out business after its purchase, the acquisition would actually pay depending upon how successfully the buyer handles the post-merger integration.

Specifically speaking, the study found that those companies that acquired distressed or insolvent competitors in the last 25 years suffered lower returns on equity, and their performance fell much below those that acquired robust businesses.

Despite the fact that study did not pertain to the financial services sector, the recent, high-profile instances that substantiate the findings of the study include the luckless acquisitions of jeopardized banks Merrill Lynch and HBOS by Bank of America and Lloyds.

The authors, led by Scott Moeller said: "Even though acquisitions of distressed firms are viewed as value-enhancing by the market, the integration process of a distressed target proves challenging for many acquirers."