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Why Acquisitions Fail

Why Acquisitions Fail

Practical Advice for Making Acquisitions Succeed

Denzil Rankine

Jul 2001, Paperback, 256 pages
ISBN13: 9780273653646
ISBN10: 0273653644
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When acquisitions go disastrously wrong they can bring down the entire company. Equally, astute acquirers can achieve excellent growth or even transform their businesses through successful acquisition. This briefing is a definitive guide to avoiding the pitfalls of acquisition. It is based on practical experience and is also backed by an independent survey of over 350 transactions and over 70 case studies. The briefing highlights the 20 main reasons for failure. These are grouped in the five phases of any acquisition; starting from initial planning through to the completion of integration. Contents include:

  • Executive summary
  • Flawed business logic
  • Flawed understanding of the new business
  • Flawed deal management
  • Flawed integration management
  • Flawed corporate development
  • Checklist for success
A mistake in any one of these areas can be enough to turn a potentially successful acquisition into a disaster.

Denzil Rankine is founder and chief executive of AMR International, a London-based strategy consultancy specialising in acquisition; over the past 20 years he has advised on 500 acquisitions in 32 countries.

List of tables

List of figures

List of case studies

Introduction

PART ONE: FLAWED BUSINESS LOGIC

  • Management summary
  • Should not have been acquiring
  • Wrong strategy
  • Opportunism
  • Did not consider alternatives

PART TWO: FLAWED UNDERSTANDING OF THE NEW BUSINESS

  • Management summary
  • Misjudged the market
  • Did not understand the business model 61
  • Over-estimated the potential synergies
  • Problem areas not identified in due diligence

PART THREE: FLAWED DEAL MANAGEMENT

  • Management summary
  • Paid too much
  • Poor negotiation
  • Hampered by process
  • Integration plan not developed in advance

PART FOUR: FLAWED INTEGRATION MANAGEMENT

  • Management summary
  • Poor communication
  • Wrong steps to implement change
  • Scale of the task under-estimated
  • Lack of clear leadership

PART FIVE: FLAWED CORPORATE DEVELOPMENT

  • Management summary
  • Changes were inappropriate
  • Cultural differences not addressed
  • Customers ignored during integration
  • Own business ignored during integration

Appendix

  • Checklist for successful acquisition

Denzil Rankine is chief executive of AMR International, a London-based strategy consultancy with offices in the USA and Germany. AMR is Europe’s leading specialist in commercial due diligence – the investigation of target companies’ markets, market positions and prospects.

Denzil studied law. After two years in the re-insurance industry he began a career in consulting, specialising in business development and acquisitions. Over the next four years he visited 49 American states helping countless European companies establish themselves in the US market.

In 1987 he was asked to set up the strategic research consulting practice for a major management consulting firm. Under Denzil’s leadership, and working closely with the corporate finance group, it soon became one of the first consultancies to offer commercial due diligence.

Denzil founded AMR in 1991; it is now Europe’s leading specialist in commercial due diligence. AMR’s success is due to its fact-based approach to company, market and competitor analysis.

The company has investigated more than 500 transactions in more than 30 countries in a wide variety of business sectors. The value of these transactions has ranged from relatively small £1 million deals to complex, cross-border transactions of the £1 billion size. AMR has worked for most of the private equity providers in London and Europe as well as corporate acquirers from large multi-nationals to small private companies. AMR’s consultants have on average eight years of strategic research experience, typically gained after earlier careers in operational roles. Most are fluent in at least one other language other than English.Denzil Rankine is also one author of A Practical Guide to Acquisitions (Wiley, 1998) and Commercial Due Diligence (Prentice Hall, 1999).