Once they decide that rates have touched the bottom, they'll be off again, looking to buy what they cannot build. The greatest merger boom in history in all likelihood will continue. It is not a bad time, therefore, to take a look at a new typology they've spent most of a year devising at the Harvard Business School. The first of a stream of articles, books, and cases appeared last month in the Harvard Business Review. What's known about the process of acquisition boils down to a few basic truisms, says Bower.
Acquirers usually overpay for their purchases.
Friendly takeovers involving the exchange of stock usually do better than hostile takeovers done for cash. CEOs fall in love with the deals they arrange and don't break off when they should. Successful integration is hard to achieve, but it is possible. Some companies seem to be especially good at it. To this fund of conventional wisdom Bower seeks to add a quintet of economic rationales for seeking combination.