Acquisitions can turned into massive money losing events. As investors we should always be sceptical about things always working the way we want.
Here is a nice plug from Firmex which shows some of the worse acquisition disasters :
What investors can learn from this is to managed their expectations about acquisitions.
- Are the company extending themselves
- In the event that this fail, would it make the overall company a much poorer investement?
- Has the company successfully acquired and integrate parcels of business before?
- Would the financing put the company structure in a worse of state
- Is the IRR provided by the management realistic?
Here you can see a lot of rushed acquisitions, not enough diligence done verifying the fundamental data.
Locally I can remember OSIM acquisition of Brookstone being utterly bad. OSIM have come back strong, and i am sure they learnt a valuable lesson
But not all will be so lucky to learn from this.
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