Posted in Finance, Accounting and Economics Terms, Total Reads: 913
Definition: Acquisition Indigestion
Acquisition indigestion is a concept used when a large company which has acquired a smaller firm fails to consolidate its operations in the existing business. This acquisition indigestion can be due to vast cultural differences, way of governance, attitude of the new employees towards the acquirer or the case where too many acquisitions have been done which cannot be handled properly.
The concept is derived from the term of indigestion of food, where either too much food or different kinds of food may cause indigestion to a body. Similarly, takeovers can also be unsuccessful.
Inorganic growth via acquisition creates impression of strength and expansion, but there are many risk related to such take over. Rapid acquisition done in haste with inadequate homework, wrong timing, egoistic reasons and impatience for success can result in calamity.