When to Walk Away from a Deal

Is your company prone to “deal fever”–getting so excited while pursuing acquisitions that it skimps on due diligence? Caught up in the thrill of the chase, many firms use due diligence to justify the deal rather than to uncover potentially serious problems.

To introduce discipline into your due diligence, Cullinan, Le Roux, and Weddigen recommend putting potential acquisitions’ strategic rationale under the microscope: Probe for targets’ strengths and weaknesses, and dig for unreliable assumptions. Be prepared to walk away. Read article.