I was indeed surprised to read this bit of news today. You may remember that a few years back, HP bought Palm, a maker of Personal Digital Assistants, and was in a similar quandary. And there are other examples (write to me if you know one). But all this teaches cash-rich companies a couple of things.
1. Companies should do due diligence before acquiring — what’s the use of spending million /billions of dollars to acquire a company, because you perceive that it will give you an edge over the competition? What are you going to do with the IP acquired and how will you integrate it into your products lines?
2. Have a well thought out strategy first. Don’t be distracted by the valuation or hot technology or IP of a company.
3. Look at ALL the assets of the company that you want to acquire. Which assets will you actually use, and which ones will you dump.
4. Look at the Culture of the organization. How similar or dissimilar is it from yours?
5. What about the liabilities of the organization you are about to acquire? Have you factored that in the valuation?
6. How many patents does the organization have and how valuable are these to you?
If you do know any other reasons why acquisitions fail, do write in and share these with me and my followers.