Published by:
Harvard Business Publishing
Length: 12 pages
Topics:
Acquisitions; Corporate strategy
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https://casecent.re/p/48341
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Abstract
A company should acquire another business only when the skills and resources of the two businesses can produce an income, or reduction in the variability of income, greater than what can be realized from a portfolio investment in the two businesses. Seven common misconceptions illustrate fallacies about diversification through acquisition. Acquisition-minded companies may use a set of seven suggested methods to obtain returns greater than those obtainable from simple portfolio diversification.
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Abstract
A company should acquire another business only when the skills and resources of the two businesses can produce an income, or reduction in the variability of income, greater than what can be realized from a portfolio investment in the two businesses. Seven common misconceptions illustrate fallacies about diversification through acquisition. Acquisition-minded companies may use a set of seven suggested methods to obtain returns greater than those obtainable from simple portfolio diversification.