[legion]

I was a finance major in college. As such, I've always paid attention to mergers and acquisitions. After 20 years, I've come to the following conclusions:

1) There are no real "mergers of equals". One company is always devouring the other. It's not always obvious based on the financing. AOL didn't buy TimeWarner, TimeWarner devoured AOL.

2) Merging a problematic company into a larger company just infects the host. Compaq couldn't fix DEC's problems. HP couldn't fix Compaq's problems (that it acquired from DEC).

3) Most mergers are done for very short-term reasons. Acquiring a competitor gives you their customers....until they start to leave. It also may disguise bigger financial issues in your own company that the public doesn't figure out until after the current batch of executives are gone. It also eliminates competition. All of these are temporary at best. Take a look at the banking industry for an example.

4) The merging of two large, national or international industry-leaders is almost always a bad idea. Ultimately, stockholders suffer, employees suffer, customers suffer. Merging two large regional players into a national player is about the biggest type of merger that can work out. The truth is, most large organizations have their own culture, processes, software, etc.. Time/Costs of integrating them is ALWAYS underestimated by management.

5) The only people that really make out in a large merger are the managers of the acquiring company. The managers of the acquired company are the next tier. They get their golden parachutes but that usually doesn't compare to the bonuses paid to the remaining management. Meanwhile, everyone is so focused on the merger, that products suffer, customers suffer, employees (that aren't outright laid off) suffer. Eventually the stock suffers, the managers are fired, and the subsequent management has to launch a crazy reorg to hide the systemic problems the merger created.

6) Companies that grow mostly through acquisitions are usually bad companies. Banks, Computer Associates, and Comcast come to mind. They all hide fleeing customers by acquiring competitors. They all have underlying unethical (and often illegal) behavior. They grow by attempting to capture the market share of competitors and not by attracting new customers. This can persist for decades. At least for Comcast, it seems the jig is up.