* Bring in Deloitte, McKenzie, or other consulting group.
* Gut the acquired company to reduce costs.
* Fold newly acquired divisions into existing mediocre division.
* Service gets run into the ground without the original people who made it great.
* Eventually the service degrades and customers leave, business line stops generating profits
* Company goes through the process again.
It's not easy to know when is the right time to jump your old trusted provider. At the beginning of the acquisition not much happens. Things degrade slowly because employees take the burden of doing the job for two people. But nobody can be subjected to the stress for too many years.
Big corporations create nothing, only abuse the good faith of employees and the cost of moving providers of small companies. I have seen that happening in tech. When small innovative companies grew they got enough economic power to not have to innovate anymore. Purchase small good companies and drain them is the new business model.
And it's a shame, there was a time that liked IBM, and others.
Nice payday for the founding team and the ticking time bomb is paid for out of bigcorp’s wallet. They go on to great new things and the eventual demise of their garbage pile will be blamed on bigcorp.
Not to say that large companies don’t destroy value - they absolutely do, frequently - but that the main error they make is not being able to appraise which startups are smoke and mirrors and which are legit. The rest of us are not so great at it either.
This seems like just another argument for limiting startup acquires. Perhaps if a big exit wasn't the goal, the company would focus on more long term viability.
Anyway, I don't think they big companies care as much about whether they destroy value, as long as they destroy a potential competitor.
Startup acquisitions, in the absence of astoundingly deep due-diligence should probably be placed in portfolios where a 5:1 failure rate can be tolerated. I’m not sure how such an acquisition would be compensated.