Acquisitions fail for reasons that range from lack of compelling strategic rationale to inadequate due diligence to conflicting cultures. I think many would say acquisitions fail because too much was paid for them. While overpaying is certainly a reason for failure, I would not say it is the top reason.
In my experience, I have found you can overpay for the right company and recover; it may just take you longer. However, you can “underpay” for the wrong company and never recover. Just keep in mind it’s not just about the money but about finding the right fit.
One top reason for acquisition failure is integrating too slowly. That often occurs when integration planning begins only after the transaction is completed.
I have had conversations on integration with countless corporate executives. Those who have been involved in integration have told me by the time they get involved, the deal’s already done. They are “parachuting” into the acquisition ─ certainly a tough position to be in.
The good news is we can change that by planning for integration early in the acquisition process and including those involved in executing the integration. Planning before the deal closes will allow you to move quickly and effectively.