A recent study indicates that companies may achieve greater profitability by slowing the pace of acquisitions. Researchers from the University of California – Riverside have found that longer intervals between successive acquisitions can lead to higher stock values. This insight challenges traditional views that encouraged a rapid-fire approach to corporate acquisitions.
The study, co-authored by Jerayr “John” Haleblian, a professor of management at UC Riverside, is detailed in the Journal of Business Research. Titled “Experience Schedules: Unpacking Experience Accumulation and Its Consequences,” the research analyzed over 5,100 acquisitions by companies in the S&P 1500 from 1992 to 2012. It reveals a clear correlation between the timing of acquisitions and company performance, as measured by changes in stock value.
Key Findings on Acquisition Timing
Haleblian and his co-authors discovered that companies that extended the time between acquisitions generally received better responses from investors. “Our findings suggest that gradually increasing the time between acquisitions can better position firms to learn and improve from each experience,” Haleblian stated. This approach allows firms to maximize the potential of each buyout instead of overwhelming their operations.
Historically, many believed that maintaining a consistent pace in acquisitions was the most effective strategy. However, Haleblian emphasizes that companies need adequate time to integrate new assets, talent, and processes into their existing structures. Rapid acquisitions can lead to what the study refers to as “acquisition indigestion,” where organizations struggle to assimilate new operations effectively.
The research highlights how taking a step back can benefit top executives by providing them the opportunity to absorb lessons from previous deals. Companies that adopt a slower acquisition pace can better refine their internal processes and enhance the integration of new employees, ultimately fostering organizational stability.
Real-World Insights from Industry Executives
To complement their quantitative analysis, the research team interviewed 17 senior executives from various sectors, including chemical, energy, and technology industries. One executive noted, “If you have fewer deals and more time in between, you can really focus on extracting the value out of that, and it’s less of a strain on the running organization.”
The implications of these findings are significant for acquisition managers. The study suggests that a more deliberate, reflective pace may yield greater long-term success. Instead of racing from one deal to the next, companies could benefit from taking the time necessary to build their acquisition experience.
In conclusion, the research underscores the importance of strategic timing in corporate acquisitions. By allowing more time between deals, companies can enhance their profitability and overall market performance, turning the traditional acquisition strategy on its head. This shift in perspective may prove critical for organizations aiming to thrive in an increasingly competitive business landscape.
More information about the study can be found in the Journal of Business Research, authored by Christopher B. Bingham et al., with the DOI: 10.1016/j.jbusres.2025.115749.
