public(MIND)

An article in “Strategy & Leadership” (Feb 2005) by Woodside Institute authors concludes that a strategy of developing a competency of innovation is more effective than acquisitions and mergers over the long-term. They state,

“Though sometimes effective in the short term, this strategy of innovation through acquisition usually fails because the acquiring corporation overestimates the value of synergies and underestimates the post-merger integration difficulties. In any case, innovation by acquisition is always at enormous cost, either in cash or stock, to the shareholders of the acquiring corporations. Shareholders see far higher returns when companies successfully innovate organically.”

Tjeck here for more.