Why Acquisitions Fail?

Not all acquisitions succeed.

Here’s a list of why some fail:

The buyer wants to eliminate a competitor by taking them off the market.

The acquisition was simply a means to an end and there was no intention of continuing the acquired business.

The investment thesis did not play out.

The proposed synergies of combining the two businesses never materialize.

The two companies don’t integrate well.

The proposed merger plan didn’t take into account culture differences, mission variances, and other factors that make combining the companies sub-optimal.

The company managers are not skilled at integration and make false assumptions about the prospects of a combined company.

The market conditions often change eliminating the initial thesis for merging the two companies.

Make sure you have a clear understanding of what the combined company will look like. 

 

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.