A Caution on Large Acquisitions

Be wary of large acquisitions. Many companies measure their performance not by how much value they're delivering to shareholders but by how large they are. This could be due to the media tending to cover large companies the most, or to a CEO's ego. The fastest way to get big is to acquire with competitors, and companies often perform such acquisitions for the wrong reasons. It is no wonder that very large acquisitions usually turn out worse than expected over the long run.

Tags: acquisitions, large caps

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