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. They are meant to be more or less exhaustive. The only scenario they leave out is the kind of pure management play on which successful conglomerates are based. Massachusetts General and Brigham and Women's hospitals merge. The idea is to eliminate overcapacity, gain market share, and become more efficient, Bower says.