Those who report on mergers and acquisitions sometimes forget that the deals often end badly. Statistics vary, but research shows that anywhere from 50 percent to 80 percent of acquisitions fail — in that they produce negative results or deleterious consequences for the buyer — or don’t live up to their potential as measured by revenue or market-share gains or ROI metrics.
Some companies have better acquisition track records than others. Cisco Systems, for instance, does a good job of identifying, acquiring, integrating, and assimilating companies and their employees. It has had misfires, of course, with StrataCom — an early and sizable acquisition — being notable among them. Other companies — Alcatel-Lucent springs readily to mind — have not fared nearly as well in the M&A field.
Yahoo is another company that hasn’t enjoyed a stellar record at the M&A casino. It seems to put its chips down on the wrong number far too often, and it occasionally fails to play a strong hand as well as it might have done.
Everybody has heard of buyer’s remorse, and most of us have experienced it at some time. A lesser-known phenomenon is seller’s remorse.
One man with a distinct case of seller’s remorse is Delicious founder Joshua Schachter, who sold his company to Yahoo in 2005.
At the time of the acquisition, Schachter had high hopes for Delicious and for how Yahoo could make it bigger, better, and more popular. Things didn’t work out. The promise of the merger wasn’t realized, neither party benefited to the degree they’d imagined, and elation was soon supplanted by disappointment and regret.
There’s no question that Schachter looks back in sadness if not in anger:
I wish I had not sold it to them (Yahoo). The cash and freedom do not even come close; I would rather work on a big, popular product.
There’s a lesson here for founders and entrepreneurs. The lesson is not that you shouldn’t sell your company. Sometimes there are very good reasons for selling a company, either because the offer is too good to refuse or because the commitment of the buyer to enhance the value of the property is enduring, sincere, and strong.
No, the lesson here is that once you sell your company, it’s no longer yours. Founders and entrepreneurs often don’t internalize that reality, and it leads to personal grief for them and to exhausting conflicts with their new colleagues. If founders can’t make that cognitive and emotional disconnection, they shouldn’t do the deal or they shouldn’t include themselves as part of the transaction.
Either way, nobody wants to be afflicted with seller’s remorse.