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Mergers and acquisitions rarely work out for the entities as such. To understand why they nonetheless continue to happen so often it’s necessary to peer beyond

Mergers and acquisitions rarely work out for the entities as such. To understand why they nonetheless continue to happen so often it’s necessary to peer beyond the corporate veil and look at the incentives of the individual players.

granzymes 6y ago
>Mergers and acquisitions rarely work out for the entities as such. Could you provide a source for that?
- deleted 6y ago
  [deleted]
- twunde 6y ago
  An oft-cited HBR article, https://hbr.org/2016/06/ma-the-one-thing-you-need-to-get-right https://hbr.org/2016/06/ma-the-one-thing-you-need-to-get-rig..., states that 70-90% of acquisitions are considered failures.
  - Closi 6y ago
    One of the things that article overlooks though is that almost all multinational companies wouldn’t be what they are today without acquisition and inorganic growth. Even that article says it: if Google avoided acquisitions they wouldn’t have Android and YouTube. Disney wouldn’t have Pixar and Fox. The biggest companies in the world would be different - and for the surviving multinationals often their acquisitions defined their current business. Some of this is successful, some of this is a failure, but it’s a game that a lot of companies needed to play to achieve their current market position. In fact, in some markets not touching M&A means not growing your core business (eg some retailers), and some big businesses may not exist anymore if they didn’t do the acquisitions they did.
    - megablast 6y ago
      How different would Disney be without Pixar? Not different at all. And fox? Too early to tell.
      - hedora 6y ago
        Name one decent Disney animated movie that was released after Pixar was founded (excluding Pixar films post-acquisition). There aren’t many because most of Disney’s talent left around when Pixar was founded. Without movies to continuously hook new kids, their entire empire is a house of cards.
        michaelt 6y ago
        I don't know if this supposed to be an argument that acquisitions are good, or that they're bad?
        JAlexoid 6y ago
        The argument is that HBR's article is just speculation, nothing more. Some mergers have literally saved companies, some have ruined them, some are considered 'unsuccessful' for esoteric reasons and others successful for purely numeric ones.
        Tomte 6y ago
        Moana, obviously. 96% on RottenTomatoes, critically acclaimed, 12th-most profitable release of 2016.
        laddershoe 6y ago
        Pixar was founded in 1986. They started releasing theatrical films with Toy Story in 1995. Are you really saying there hasn't been a single good Disney animated movie in the past 25 years? What's the basis for that statement? The history of the two studios is way more involved than what you're suggesting, and talent moves around between studios quite a lot. And 25 years is a long time; there have been entire generations of talent that have risen up since then, and trust me, they're not all at Pixar. Source: I worked at Disney Animation for nearly a decade (and closely with Pixar during that time). I'm certainly not unbiased but probably way more informed.
foobiekr 6y ago
this is the correct answer imho
echelon 6y ago
> Mergers and acquisitions rarely work out Instagram DoubleClick NeXT Here are some businesses off the top of my head that are thriving because of their acquisitions.
- exolymph 6y ago
  Survivorship bias.
- qntmfred 6y ago
  The key word being rarely
  - echelon 6y ago
    Everywhere I've worked, 75% or more of acquisitions or acquihires went extremely well and resulted in strategic benefit and/or gain of great talent. There are only a couple of instances that stand out as being a bad fit, and one of those companies later got sold to another player in the same space for a profit. So it's really never been a bad use of capital from my perspective.
    - anticsapp 6y ago
      Are you sure it isn't 76% with all that hard cold data you're using?
      - viscanti 6y ago
        76% is "75% or more". So it's covered.
      - echelon 6y ago
        My current office was an acquisition. Two cohorts of my colleagues are from acquisitions. One of our newer major revenue streams. Acquisition. Unrelated thing not core to the business that we sold. Acquisition we spun off at a profit. It's not 75% exactly, but this isn't even napkin math. Just top of mind. I feel as though you're belittling my experience and my person. Why? And also, please don't. I've told you that from my direct experience, most acquisitions I've been witness to have been well thought out, calculated moves. It turns out we're doing a good job. Please don't be so hostile.

granzymes 6y ago

>Mergers and acquisitions rarely work out for the entities as such. Could you provide a source for that?

deleted 6y ago
[deleted]
twunde 6y ago
An oft-cited HBR article, https://hbr.org/2016/06/ma-the-one-thing-you-need-to-get-right https://hbr.org/2016/06/ma-the-one-thing-you-need-to-get-rig..., states that 70-90% of acquisitions are considered failures.
- Closi 6y ago
  One of the things that article overlooks though is that almost all multinational companies wouldn’t be what they are today without acquisition and inorganic growth. Even that article says it: if Google avoided acquisitions they wouldn’t have Android and YouTube. Disney wouldn’t have Pixar and Fox. The biggest companies in the world would be different - and for the surviving multinationals often their acquisitions defined their current business. Some of this is successful, some of this is a failure, but it’s a game that a lot of companies needed to play to achieve their current market position. In fact, in some markets not touching M&A means not growing your core business (eg some retailers), and some big businesses may not exist anymore if they didn’t do the acquisitions they did.
  - megablast 6y ago
    How different would Disney be without Pixar? Not different at all. And fox? Too early to tell.
    - hedora 6y ago
      Name one decent Disney animated movie that was released after Pixar was founded (excluding Pixar films post-acquisition). There aren’t many because most of Disney’s talent left around when Pixar was founded. Without movies to continuously hook new kids, their entire empire is a house of cards.
      - michaelt 6y ago
        I don't know if this supposed to be an argument that acquisitions are good, or that they're bad?
        JAlexoid 6y ago
        The argument is that HBR's article is just speculation, nothing more. Some mergers have literally saved companies, some have ruined them, some are considered 'unsuccessful' for esoteric reasons and others successful for purely numeric ones.
      - Tomte 6y ago
        Moana, obviously. 96% on RottenTomatoes, critically acclaimed, 12th-most profitable release of 2016.
      - laddershoe 6y ago
        Pixar was founded in 1986. They started releasing theatrical films with Toy Story in 1995. Are you really saying there hasn't been a single good Disney animated movie in the past 25 years? What's the basis for that statement? The history of the two studios is way more involved than what you're suggesting, and talent moves around between studios quite a lot. And 25 years is a long time; there have been entire generations of talent that have risen up since then, and trust me, they're not all at Pixar. Source: I worked at Disney Animation for nearly a decade (and closely with Pixar during that time). I'm certainly not unbiased but probably way more informed.

foobiekr 6y ago

this is the correct answer imho

echelon 6y ago

> Mergers and acquisitions rarely work out Instagram DoubleClick NeXT Here are some businesses off the top of my head that are thriving because of their acquisitions.

exolymph 6y ago
Survivorship bias.
qntmfred 6y ago
The key word being rarely
- echelon 6y ago
  Everywhere I've worked, 75% or more of acquisitions or acquihires went extremely well and resulted in strategic benefit and/or gain of great talent. There are only a couple of instances that stand out as being a bad fit, and one of those companies later got sold to another player in the same space for a profit. So it's really never been a bad use of capital from my perspective.
  - anticsapp 6y ago
    Are you sure it isn't 76% with all that hard cold data you're using?
    - viscanti 6y ago
      76% is "75% or more". So it's covered.
    - echelon 6y ago
      My current office was an acquisition. Two cohorts of my colleagues are from acquisitions. One of our newer major revenue streams. Acquisition. Unrelated thing not core to the business that we sold. Acquisition we spun off at a profit. It's not 75% exactly, but this isn't even napkin math. Just top of mind. I feel as though you're belittling my experience and my person. Why? And also, please don't. I've told you that from my direct experience, most acquisitions I've been witness to have been well thought out, calculated moves. It turns out we're doing a good job. Please don't be so hostile.