Harvard Business Review: 'M&A is a mug's game'

Remember, when anybody suggests that Apple buy anything, that 70% to 90% of acquisitions are abysmal failures.

An oldie but goodie, from Roger L. Martin’s M&A: The One Thing You Need to Get Right, in HBA’s June 2016 issue:

To be sure, we’ve seen successes. The purchase of NeXT in 1997 for what now looks like a trivial $404 million saved Apple and set the stage for the greatest accumulation of shareholder value in corporate history. The purchase of Android for $50 million in 2005 gave Google the biggest presence in smartphone operating systems, one of the world’s most important product markets. And Warren Buffett’s rolling acquisition of GEICO from 1951 to 1996 created Berkshire Hathaway’s cornerstone asset. But these are the exceptions that prove the rule confirmed by nearly all studies: M&A is a mug’s game, in which typically 70%–90% of acquisitions are abysmal failures.

My take: I can attest to that. I watched AOL Time Warner from the inside and took the hit in my 401K. Apple investors are lucky that Tim Cook is no Gerry Levin.

Thanks to friend-of-the-blog Fred Stein for the pointer.

See also:

• 7 things Apple won’t buy
• Why Apple buying Netflix is a f…ing stupid idea