Musings on Markets • 0 implied HN points • 26 Feb 14
- Companies often buy other businesses to prevent competitors from gaining an edge. This strategy, called defensive dealmaking, can sometimes be risky and expensive.
- For a defensive acquisition to be worth it, the company must be valuable, the threat must be real, and the deal should be the most cost-effective option.
- It’s not always the best idea to act quickly just because others might; sometimes doing nothing is the smarter choice and can save a lot of money.