Around 90% of tech takeovers fail, yet companies persist in pursuing them. This trend is driven by a variety of factors, including the desire for quick growth, the acquisition of unique technology, and the lure of eliminating competition. Some companies view takeovers as a shortcut to innovation, bypassing the risks and costs associated with research and development.
Despite the potential benefits, the high failure rate of tech takeovers raises questions about their effectiveness as a growth strategy. The reasons for these failures are complex and varied, ranging from cultural clashes between merging companies to the challenge of integrating different technologies.
One notable example of a failed tech takeover is Microsoft’s acquisition of Nokia’s phone business in 2013. Despite high expectations, the deal resulted in a $7.6bn write-down and the layoff of 7,800 employees.
The prevalence of tech takeovers, despite their high failure rate, suggests that companies may need to reevaluate their acquisition strategies. Rather than focusing solely on growth and competition, it may be more beneficial to invest in internal innovation and development.
While tech takeovers can offer quick growth and competitive advantages, their high failure rate indicates that they are not a guaranteed path to success. Companies need to carefully consider the potential risks and challenges before pursuing this strategy.
Despite the high failure rate, tech takeovers remain a popular strategy due to their potential benefits. However, companies may need to reconsider their approach and focus more on internal innovation and development.
Go to source article: http://www.thememo.com/2015/05/21/if-90-of-tech-takeovers-flop-why-do-we-keep-doing-them/