The more reasons you have to buy a company, the less you should want it.
This may sound strange. After all, isn’t it best to be efficient and kill two (or more) birds with one stone? Since acquisitions are rather expensive, shouldn’t you get your money’s worth?
Endless Possibilities…Zero Results
It can be tempting to think this way, but experience shows that multiple reasons for an acquisition lead to multiple reasons for failure. In theory, meeting many needs through one acquisition sounds good, but in actuality you risk fulfilling none of them. With too many reasons for acquisition, your strategy becomes hazy, unfocused, and diluted. You move forward without a clear direction or purpose, which can lead to buying the wrong company, and to problems with integration.
Take the AOL-Time Warner merger as an example of an acquisition gone wrong. The executives praised the deal in a press release, saying, “No company will be able to better capitalize on convergence of entertainment, communications, and commerce. The possibilities are truly endless.” Unfortunately “endless possibilities” translated into a historic failure: the grand marriage collapsed. Continue reading this post on AMA Playbook.