Site Map Contact UsHome

The New M&A Playbook

By Clayton M. Christensen, Andy Waldeck


HBR

Download a complimentary copy of the article here.

Companies spend more than $2 trillion on acquisitions every year, yet the M&A failure rate is between 70% and 90%. Executives can dramatically increase their odds of success, the authors argue, if they understand how to select targets, how much to pay for them, and whether and how to integrate them. The most common reasons for making an acquisition include holding on to a premium position or cutting costs. But to realize those benefits, the acquirer needs to achieve economies of scale by absorbing the target's resources into its operations. CEOs, who are often unrealistic about the performance boost from such acquisitions, must be sure not to pay too much for them. A less-familiar reason for making an acquisition is to fundamentally change a company's growth trajectory. In those deals, the acquirer uses the target's business model as a platform for growth. Because the business models with the most transformative potential are often disruptive, they can be difficult to evaluate, and CEOs often believe that such acquisitions are overpriced. In fact, however, those are the ones that can pay off spectacularly.

Related Insights

Innosight in Harvard Business Review:

New Business Models in Emerging Markets

Read more

Books from Innosight:

The Innovator's Solution: Creating and Sustaining Successful Growth

Read more

Innosight has developed a methodology to understand the total problem and to think through business models in a systematic way.

Omar Ishrak
CEO, Medtronic

Grow with Innosight

Interested in learning how Innosight can help your organization?

Contact us

Meet our team and explore what it's like to work at Innosight.

Careers