More value is destroyed by acquisitions than any other single action taken by companies.
—ASWATH DAMODARAN, NYU FINANCE PROFESSOR
Finding new growth engines at a mature company can be challenging, and management generally takes one of two approaches: (1) develop new categories of products, services, or customers organically or (2) make acquisitions. In other words, “make or buy.”
Success stories abound following either strategy, or combinations of both. Consider the smartphone market. Apple developed its megahit iPhone product internally. Since its release a decade ago, over a billion iPhones have been sold. Today, the smartphone generates about 60 percent of Apple’s revenue. In contrast, Google became a formidable player in the smartphone space ...