14/12/2024

4 reasons acquisitions fail

4 reasons acquisitions fail
4 reasons acquisitions fail

Acquisitions often prove pivotal to the long term success (or otherwise) of a company. When successful, an acquisition can help you grow your business, expand into new markets and unlock new customer bases.

However, all too often, acquisitions fail. There are many reasons why they are not as successful as desired, with current estimates stating that between 70-90% acquisition deals fall at the first hurdle.

To avoid this happening to your business, it is incredibly important to be aware of the common reasons acquisitions fail. Knowing what is likely to go wrong, and adjusting course accordingly, could make a big difference to the success of your own merger.

1. Wrong cultural fit

When selecting the company you wish to merge with, be sure to focus on more than the obvious attributes the business has to offer. The culture which exists within the organisation is a vital part of the mix, yet it is often overlooked.

A poor cultural fit could be the nail in the coffin of even the most promising new acquisition by stunting development, causing disarray to processes and creating disengaged teams.

The reason for this issue is a simple one; the acquiring company often overlooks the culture which has already been established.

2. Poor communication

Failure to communicate throughout the process is another major stumbling block on the path to a successful acquisition. It is vital that companies remain transparent and provide room for stakeholders to state their concerns clearly and without prejudice. In addition to reassuring the stakeholders who are a pivotal part of the change, time should be taken to discuss the concerns which most prominently affect every group associated with the shift.

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3. Technological oversight

Different companies quite naturally have different levels of technology adoption. In order for an acquisition to be successful, the differences must be taken into account and ways of creating cohesion explored. This task often takes more time than has been initially anticipated, due to the complexity of updating entire systems or moving to a more cohesive way of operating across the different business units and locations.

4. Talent management

Knowing who the most valuable players are at each organisation is an essential part of acquisition. It is vital to identify these individuals swiftly so that they can be retained – acquisitions create a great sense of uncertainty for staff, especially those working in the business being taken over. This could prove catastrophic if talent isn’t reassured and managed. The very last thing you need during the acquisition itself is to lose experienced team members to a rival due to a mismanagement of talent or poor communication flows.

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Scott Dylan

Scott Dylan

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Scott Dylan

Scott Dylan is the Co-founder of Inc & Co and Founder of NexaTech Ventures, a seasoned entrepreneur, investor, and business strategist renowned for his adeptness in turning around struggling companies and driving sustainable growth.

As the Co-Founder of Inc & Co, Scott has been instrumental in the acquisition and revitalization of various businesses across multiple industries, from digital marketing to logistics and retail. With a robust background that includes a mix of creative pursuits and legal studies, Scott brings a unique blend of creativity and strategic rigor to his ventures. Beyond his professional endeavors, he is deeply committed to philanthropy, with a special focus on mental health initiatives and community welfare.

Scott's insights and experiences inform his writings, which aim to inspire and guide other entrepreneurs and business leaders. His blog serves as a platform for sharing his expert strategies, lessons learned, and the latest trends affecting the business world.

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