3 ms·

“Synergies” are great but many of the most profitable acquisitions are, at heart, bets that the acquiree was undervalued.

• falcor84 4y ago
  But even those are typically bets about the potential of the acquired company, rather than its current state. In other words, the acquirer typically believes that they possess a set of skills that will enable them to bring the potential of the acquired company to light, demonstrating only post-hoc that the company's original valuation was off. As an analogy, it's like house-flipping - the acquirer needs to have a very good "eye" for potential, and then needs to put in significant work to realize that potential. As I understand, this is the model that Danaher follows with their acquisitions, but they're only able to do this because of that unique set of skills they possess internally, which sounds to me not that qualitatively different from regular synergy.