When companies merge, executives and shareholders alike often get excited. But not every big corporate transaction works the way everyone hopes it will.
New York Times
Need more proof that mergers don't always pan out as planned? Just ask shareholders of Time Warner. Time Warner merged with America Online, and investors have largely suffered ever since.
Customers can suffer, too. When they do, shareholder suffering may follow. Some critics fear that Amazon.com's
Acquisitions aren't all bad
Some companies don't just make occasional buys -- they run on acquisitions. Johnson & Johnson, for example, is famous for buying smaller companies, among other frequent purchases. In 2006, it bought Pfizer's
Warren Buffett's Berkshire Hathaway
Not every merger will pay off -- but by the same token, not every deal will be a dud. Just steer clear of companies engaging in obviously silly or reckless deals. Executives chasing the thrill of an acquisition, without regard to good sense, may prove less than savvy in other areas of management as well.
Get the latest news on Warren Buffett's purchases and sales. Morgan Housel's done all the work for you right here.
Longtime Fool contributor Selena Maranjian owns shares of Johnson & Johnson, Time Warner, Procter & Gamble, Berkshire Hathaway, and eBay. Amazon.com, Berkshire Hathaway, and eBay are Motley Fool Stock Advisor selections. Johnson & Johnson and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of Procter & Gamble and Berkshire Hathaway. Try any of our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.