6 ms·

Survivor bias and all that. I wonder what the ratio is between - bought and turned into success - bought and integrated into the larger business - bought and

Survivor bias and all that. I wonder what the ratio is between - bought and turned into success - bought and integrated into the larger business - bought and closed after running into the ground - bought and then later spun off due to inability to create a successful business or integrate. Not just for Google, but across IT as a whole.

PaulHoule 7y ago
The number I have heard (from maybe 15 years ago) is that "2/3 of corporate mergers meet their goals." That was across a range of industries. Tech in 2020 might be different, there is a certain kind of mindlessness around acquisitions that happens around technology sectors. For instance, AOL bought Time Warner, regretted it, AT&T bought Time Warner, now the vulture funds like Elliot Capital Management are circling and they will have the CEOs head. AT&T's mistakes were made by people who were more technical than MBA, but it's a consistent trope that "Google bought Company A" and then Company B brings their salespeople to muster the next morning to inform them what's going to happen at Company A, and the next sales retreat is fistbumps all around. I wonder if we could put a break on mergers and acquisitions, not for the sake of communities, workers, and competition, but just for the poor stockholders!
- clairity 7y ago
  > "The number I have heard (from maybe 15 years ago) is that '2/3 of corporate mergers meet their goals.'" my recollection is that it's closer to half. m&a deals tend to be executive vanity projects as often as sound strategy.
  - calvinmorrison 7y ago
    Again it depends. Look at Church & Dwight, more known as the Arm & Hammer company. Their strategy of expanding all over the grocery store cleaning isle seems to have worked as they have a whole team of brands and brands at different price premiums. They have bought smaller cpg companies successfully
    - clairity 7y ago
      yes, certainly there are successes, but it's good to realize that that's only about half of attempts. if you're an involved shareholder, it's eminently reasonable to be skeptical of executive strategies that feature m&a centrally.
      - ksec 7y ago
        And even with the half rate "successes" ( Success in terms that is actually defined by the executive themselves ), most of them were done with a miraculously talented team that normally has little to do with the executives. Because in an ideal world you expect M&A to provide synergy, but it is often where 1+1 = 1.5 or less, and at best successes are 1+1 = 2. What people should be aiming for is 1+1 = 2.5 or more. And recent Intel ( Post Andy Grove or Post Patrick Gelsinger ) has a track record of both poor strategic decision, acquisition and execution. Note: That is M&A with respect to diversification.
        clairity 7y ago
        yes, i refrained from using the word "synergy" because most people don't differentiate the common pejorative understanding and it's M&A usage. it's a fascinating component of how companies are often overvalued in m&a activity.

PaulHoule 7y ago

The number I have heard (from maybe 15 years ago) is that "2/3 of corporate mergers meet their goals." That was across a range of industries. Tech in 2020 might be different, there is a certain kind of mindlessness around acquisitions that happens around technology sectors. For instance, AOL bought Time Warner, regretted it, AT&T bought Time Warner, now the vulture funds like Elliot Capital Management are circling and they will have the CEOs head. AT&T's mistakes were made by people who were more technical than MBA, but it's a consistent trope that "Google bought Company A" and then Company B brings their salespeople to muster the next morning to inform them what's going to happen at Company A, and the next sales retreat is fistbumps all around. I wonder if we could put a break on mergers and acquisitions, not for the sake of communities, workers, and competition, but just for the poor stockholders!

clairity 7y ago
> "The number I have heard (from maybe 15 years ago) is that '2/3 of corporate mergers meet their goals.'" my recollection is that it's closer to half. m&a deals tend to be executive vanity projects as often as sound strategy.
- calvinmorrison 7y ago
  Again it depends. Look at Church & Dwight, more known as the Arm & Hammer company. Their strategy of expanding all over the grocery store cleaning isle seems to have worked as they have a whole team of brands and brands at different price premiums. They have bought smaller cpg companies successfully
  - clairity 7y ago
    yes, certainly there are successes, but it's good to realize that that's only about half of attempts. if you're an involved shareholder, it's eminently reasonable to be skeptical of executive strategies that feature m&a centrally.
    - ksec 7y ago
      And even with the half rate "successes" ( Success in terms that is actually defined by the executive themselves ), most of them were done with a miraculously talented team that normally has little to do with the executives. Because in an ideal world you expect M&A to provide synergy, but it is often where 1+1 = 1.5 or less, and at best successes are 1+1 = 2. What people should be aiming for is 1+1 = 2.5 or more. And recent Intel ( Post Andy Grove or Post Patrick Gelsinger ) has a track record of both poor strategic decision, acquisition and execution. Note: That is M&A with respect to diversification.
      - clairity 7y ago
        yes, i refrained from using the word "synergy" because most people don't differentiate the common pejorative understanding and it's M&A usage. it's a fascinating component of how companies are often overvalued in m&a activity.