The Nature of Failure: Why Do Companies Fail in Overseas Acquisitions?
The author examines why Japanese companies have failed in overseas acquisitions, identifying six conditions to analyze the cases of failure explored previously. He identifies three conditions based on selection of the acquisition: whether the acquisition was in a related business for horizontal/vertical integration, whether there was an advantage of scale (the target was larger/smaller than the acquiring company), and whether the acquisition was done to rescue an affiliated company or buy out a joint venture. He identifies three post-acquisition management conditions that may affect success: whether there was consistent management, whether there were additional acquisitions in related businesses, and whether the targeted business was maintained as a separate entity. Through statistical testing, he found that three of these conditions were related to failure or success.
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