When you ask corporate executives why they are making a particular acquisition, they usually offer a strategic explanation, such as “The geographic spread lines up perfectly with where we are,” or “Their product portfolio has remarkable synergy with ours.” If you ask them two years later how the company has benefited from the acquisition, the answer is often dramatically different. They tend to focus at that point on the “softer” factors with comments such as “They made us rethink our decision-making processes,” or “They introduced us to a new approach to product development,” or simply “They shook up our culture.” Usually, these softer considerations had nothing to do with the original impetus for the acquisition, yet they often turned out to be critical to the direction of their companies.
Indeed, revitalization is an important outcome of acquisition and should be a strong consideration when making the decision to acquire. In my research, I analyzed the acquisitions and subsequent performances of a number of large, successful companies, several of which, at some point in their histories, had become rigid and inert in their thinking — a well-known phenomenon that has been labeled thesuccess trap.1 (See “About the Research,” p. 46.) The analysis showed that the acquisitions helped the companies restore a sense of vitality to their businesses and unleashed a... To read the complete article, login or sign-up using the form below.
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