Failure of Acquisitions

WHY DO ACQUISTION FAIL: REASONS FOR FAILURE.

According to Joel Jervis “there is good and bad news with regards to completing successful Acquisitions, and the good news is that “it is almost entirely within the control of the acquirer to get it right” and the bad news been that it has always been and 60% of the acquirer are still getting it wrong. (Joel Jervis Acquisitions November 2005:PPT, slides). Below are reasons for failure of acquisitions;

* Flawed business logic: Acquisitions get to boost egos though it is a high risk strategy, and an acquirer needs a strategy that gets to add values needed, not all companies are expected to be acquiring, like a company that has its own difficulties is likely not to be properly helped by acquisition at all. So any company that wishes to acquire needs to be sure of the adding values.

* Flawed Understanding of the new business: Most companies fail to know or understand why the business the wish to acquire make their money because different business make their money for different reasons even though the are in the same market (e.g. Air travel: Ryanair focuses on prices while BA on services, Computing: Compaq focuses on quality while Dell is delivery). So every acquirer has to go beyond money wise and try to understand the companies targets and what the are trying to achieve, are the stable and as well is the growth attributed to their progress.

* Flawed Deal Managements: Acquisition is complex and there is no easy solution, Negotiations that are been carried out between businesses can go wrong even before It is been finalized. So does the acquirer understand the negotiation strategy that reflects on the deal the wish to get and when not properly understood can lead to tensions and damaged businesses which leads to fatal results in the end.

* Flawed Integration Management: After the deal is been done and sealed, businesses at times lack clear leadership, the do not get to know who the boss would be, and...