How well do acquisitions work?

There was an interesting article from Derek Singleton of Software Advice today about the shopping spree that IBM has been on over recent years, and some speculation about who might be next in the blue shopping cart:

While I think it is difficult to predict acquisitions, what is interesting is the sheer extent to which IBM has been buying technology in recent years. Seeing it laid out in detal in this article is certainly interesting. Of course, Oracle, SAP and Microsoft are no strangers to this route either, and it does make you wonder to what extent the giant companies have to some extent given up on relying on their own R&D, and dipped into their cash reserves when a particular trend n the market has eluded them and a smaller, nimbler company has made progress. From a customer viewpoint it is a tricky balance. It is comforting to some extent to know that a key technology is in “safe” hands, yet this can be illusory. When a company is small and independent it is very focused on what it is doing, but a giant vendor with dozens or hundreds of products is only going to give so much attention to a particular niche product. It is also common for energetic founders of a small company to move on at the point of an acquisition, preferring to avoid the loss of control that big company life brings.

What would be interesting would be for someone to step back and assess the success of acquisitions by major companies, to see which ones really worked and which ones just faded away into the background, in particular if it was possible to work out any common lessons from the successes and failures. This is not an easy thing to do, as large public companies frequently resist breaking out their component businesses in terms of financial figures, but it is an interesting topic.

In the areas that The Informaton Difference concentrates on, M&A activity can be seen here:

All comments welcome.