Every executive wants their M&A strategy to be a masterstroke—a bold move that reshapes markets and delivers outsized returns. But here’s an uncomfortable truth: many deals aren’t driven by data, vision, or even necessity. They’re driven by psychology. When a competitor snaps up a rival, or a flurry of acquisitions lights up your industry, the pressure to act can feel overwhelming. Suddenly, the question shifts from “Should we?” to “Why aren’t we?”
What’s Driving Your Next Deal?
Herd mentality—a behavioral quirk as old as markets—often grips companies during M&A surges. However, research shows that the early stages of M&A cycles are when the most successful deals typically happen, before collective impulses dominate.1 In 2024, life sciences deal values plummeted to $82 billion, a steep drop from $178 billion in 2023, reflecting a stifled market.2
Yet, the outlook for 2025 offers cautious optimism despite recent turbulence from trade disruptions and federal layoffs. Factors fueling hope include potential Federal Reserve interest rate cuts, sustained demand for innovative healthcare solutions, and anticipated regulatory relief and corporate tax reductions.3 Moreover, with patent expirations looming for the top 20 biopharma companies, a projected $180 billion growth gap by 2030 could further spark deal-making.4
After a subdued 2024, 2025 presents opportunities for those who can navigate the landscape wisely. Understanding herd mentality is critical: research shows that mergers executed early in a cycle outperform those rushed at activity peaks, when herd-driven decisions often inflate valuations and cloud judgment.
As the M&A market reignites, life sciences leaders who resist herd instincts—despite trade and federal workforce headwinds—could turn emerging opportunities into a decisive strategic edge.
The Psychology Behind the Herd
Herd mentality isn’t just a buzzword; it’s a well-documented phenomenon rooted in behavioral economics.5 Three forces often fuel it in M&A6:
- Fear of Missing Out (FOMO)
When a rival acquires a promising startup or a new technology takes off, the fear of being left behind can spark a chain reaction. Think of the AI acquisition spree in recent years—once tech giants like Google or Microsoft made their moves, others scrambled to follow, even if the fit wasn’t perfect.
- Social Proof
If everyone’s doing it, it must be right—right? This logic can seduce even the savviest executives. During the late 1990s dot-com boom, companies raced to buy internet startups at sky-high valuations, assuming the herd knew something they didn’t. Spoiler: most didn’t.
- Competitive Pressure
Shareholders, analysts, and boards don’t like sitting still while peers make headlines. A blockbuster deal by a competitor can turn M&A into a status game, where the optics of action outweigh the reality of results. The result? Rushed deals with shaky foundations.
The numbers back this up. Research from the Harvard Business Review suggests that approximately 70%7 of M&As fail to deliver their promised value. A big reason? Too many are herd-driven, chasing trends instead of building on a clear, independent rationale.
Herd vs. Vision: A Tale of Two Deals
Consider two landmark M&As in life sciences to see this psychology at play:
- The Herd Flop: Pfizer-AstraZeneca (Failed Bid, 2014)8
At the height of a biopharma consolidation wave, Pfizer’s $117 billion bid for AstraZeneca aimed to ride the industry’s tax-inversion and blockbuster-drug frenzy. It was less about a unique strategy and more about joining the herd, chasing scale and cost savings. Regulatory pushback, valuation disputes, and AstraZeneca’s resistance killed the deal, leaving Pfizer with a costly lesson in herd-driven overreach—burning through time and resources for no gain.
- The Vision Win: Roche-Genentech (2009)9
Roche’s $46.8 billion acquisition of Genentech wasn’t a knee-jerk reaction to trends—it was a calculated move to secure cutting-edge biotech innovation. While others scrambled for quick generics or me-too drugs, Roche bet on Genentech’s pipeline (e.g., Avastin) as a long-term growth driver. The result? A powerhouse in oncology and biologics, cementing Roche’s leadership in precision medicine.
The difference? One followed the herd; the other led the pack.
Rewiring Your M&A Mindset
In the fast-paced M&A space, especially within life sciences and healthcare, the herd can be loud. Making informed, measured decisions that turn opportunities into long-term value begins with discipline—and a partner who can cut through the noise. The most successful leaders don’t just listen—they question. They don’t just react—they strategize. And they don’t just buy—they build.
Here are three critical steps to ensure your M&A strategy drives real value:
- Challenge the Why
Before you sign that letter of intent, ask: Is this deal solving a specific problem or seizing a unique opportunity? If the answer is “because others are doing it,” hit pause. CREO helps clients stress-test their M&A rationale with target identification and market diagnostics, ensuring every move aligns with their broader strategy.
- Master the Numbers
Herd-driven deals frequently result in overpaying for inflated assets, as bidding wars push valuations past rational limits. Our proprietary due diligence process gives you the clarity to bid smart, not just fast.
- Plan Beyond Day One
A signed deal is just the beginning. Integration failures sink even the best-intentioned acquisitions. Our post-merger playbooks, refined through extensive client experience, transform synergies into tangible results.
Take Action Today
At CREO, we’ve spent years guiding companies successfully through the traps we’ve described. From screening targets and conducting thorough due diligence to steering post-merger integration, our advisors deliver the rigor and insights you need to turn a good idea into a great outcome. While the herd might capture the headlines, it’s the leaders who achieve lasting results.
By leveraging CREO’s industry-specific expertise, you can be confident that your decisions drive strategic goals while complying with regulatory, data privacy, and other critical standards. Our services cover key areas, including:
- Due Diligence Management
CREO manages a timely and thorough due diligence process that drives alignment and accelerates value realization during integration.
- Post Merger Integration
CREO guides organizations through successful integrations that realize deal theses and establish competencies for future transactions.
- Divestiture Management
CREO drives transaction speed, efficiency, and expertise to right-size activities, allowing leaders to remain focused on building the future.
- PMO & Process Optimization
CREO enables you to move to action on your business strategy through the discipline of managing projects and processes as a company asset. With CREO’s systematic approach, you can better predict outcomes and achieve your goals across scope, schedule, budget, and quality objectives.
Partner with CREO
Let’s connect to explore how CREO can support your unique M&A goals and drive lasting value for your organization.
Sources
- Goel, Anand M., and Anjan V. Thakor. “Do envious CEOS cause merger waves?” Review of Financial Studies, vol. 23, no. 2, 13 Nov. 2009, pp. 487–517, https://doi.org/10.1093/rfs/hhp088. ↩︎
- Life Sciences Under the Microscope: Key 2024 Takeaways and What’s Ahead for 2025 | Ropes & Gray LLP – JDSupra ↩︎
- Healthcare M&A Insights: Q4 2024 & 2025 look ahead | Modern Healthcare ↩︎
- The Looming Patent Cliff: Big Pharma Giants Brace for Fall | The Healthcare Technology Report. ↩︎
- Herd Mentality ↩︎
- Nerlekar, Varsha Shriram, et al. “The Herd Mentality: Understanding the Theories and Models of Herding Behavior in Financial Markets.” Psychological Drivers of Herding and Market Overreaction, IGI Global, 2025, pp. 255–291. ↩︎
- The Big Idea: The New M&A Playbook ↩︎
- Pfizer declares end to AstraZeneca bid…for now | pharmaphorum ↩︎
- Was The $47 Billion Acquisition of Genentech In 2009 A Good Deal For Roche? ↩︎
