If you pursue acquisitions, there is a high chance of failure. That sound harsh, but about 70% of all mergers and acquisitions fail. Deals fall apart before the transaction closes, suffer integration issues post-closing, or simply do not yield the return on investment that was expected. Think about the disastrous “merger of equals” between AOL and Time Warner in 2001.
On the other hand, when done right, acquisitions can rapidly grow your company, setting you up for long-term success. Examples include Disney acquiring Pixar in 2006 in order to dominate the animated film business or Facebook acquiring Instagram to gain new users and develop mobile expertise. For those of you who want to grow successfully through M&A, here are five of the biggest mistakes to avoid.
1. Lack of strategy
Failing to have a concise strategy is the number one reason acquisitions fail. Either firms have no strategy at all or they try to use one deal to fulfill multiple strategic needs. Click to continue reading on The M&A Growth Bulletin.
This article originally appeared in The M&A Growth Bulletin, Capstone’s quarterly newsletter that delivers essential guidance on growth through M&A along with tips and tactics drawn directly from successful transactions completed in the market. Subscribe today to read the current edition and receive The M&A Growth Bulletin every quarter.