There are a variety of reasons why companies do acquisitions. Some common reasons include:
- – The Buyer views the Target as undervalued.
- – The Buyer’s own organic growth has slowed or stalled and needs to grow in other ways (via acquiring other companies) in order to satisfy the growth expectations of Wall Street.
- – The Buyer expects the deal to result in significant synergies (see the next post for a discussion of synergies).
- – The CEO of the Buyer wants to be CEO of a larger company, either because of ego, legacy or because he/she will get paid more.