The acquiring firm is then called a holding company.
To succeed it is not enough to run the acquired firm well.
Academic studies of all of the big merger waves of this century have shown clearly that, although shareholders of acquired firms have tended to benefit, those in the acquiring firm have lost.
The "winner's curse" describes the phenomenon of mergers destroying value for the shareholders of an acquiring firm.
The most important term that must be negotiated in a combination is the price the acquiring firm will pay for the assets it takes over.
Among the problems for an acquiring firm: taking on so many lawyers at once would not only be cumbersome, but also potentially alienate its own partners.
An acquired firm must follow hard rules, such as supplying financial information ("joining GE is like taking a drink from a fire hose" is one complaint).
The relatedness between the acquired and acquiring firms' knowledge bases has a curvilinear impact on the acquiring firm's innovative performance.
Non-technological M&As appear to have a negative impact on the acquiring firm's post-M&A innovative performance.
However, even the relatively more successful horizontal acquisitions often destroy value for the acquiring firm (York et al., 2011).
Integration choices may not affect the whole of an acquired firm at the same time and to the same extent.
