In an article for National Defense Magazine, Navigant shares five warning signs of a failed acquisition
Companies often use acquisitions to strengthen their place in the market and speed growth. However, according to The Harvard Business Review, over 70% of acquisitions fail, with the inability to live up to advertised outcomes cited as a top reason.
In an article for National Defense Magazine, John Walker, managing director at Navigant, said the rationale CEOs often give for an acquisition is the very thing they mess up in execution — leveraging capabilities and exploiting synergies. To capitalize on the benefits sold to Wall Street, Walker said CEOs of industrial companies should watch for several warning signs, including:
"CEOs tend to think in terms of broad market impact and financial return," Walker said. "Certainly, this is a good starting point, but to really understand value in the eyes of the market one must build competitive advantage from the bottom up."
Walker added that CEOs need to know where the market is going or likely to go. Once the tactical steps are taken, he said, "the hard work begins of identifying combinations of skills, capabilities, technologies, and products that can leap-frog the competition."