Strategic Management: Formulation and Implementation

The Seven Deadly Sins On Mergers And Acquisitions

The corporate world contains many examples of failed acquisitions. In an examination of the relationship between business-level competitive advantage and corporate strategy, Michael Porter reported on the acquisition and subsequent divestiture history of "33 large, prestigious U.S. companies over the 1950-1986 period and found that most of them had divested many more acquisitions than they had kept.

One article offered "The Seven Deadly Sins on Mergers and Acquisitions":

  1. Paying too much.
  2. Assuming a boom market won't crash.
  3. Leaping before looking.
  4. Straying too far afield.
  5. Swallowing something too big.
  6. Marrying disparate corporate cultures.
  7. Counting on key managers staying.

If there is a lack of fit between the two organizations it is not unusual for the merger or acquisition to fail and be dissolved in a subsequent divestiture.