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Why do so many acquisitions and roll-ups look great on a spreadsheet—and then disappoint after the deal closes? In this From The Ground Up Show: Topics episode, Charbel Louis Karam explains why revenue and EBITDA alone are not enough to justify an acquisition. Two companies can serve similar customers, operate in the same industry, and appear financially complementary. But if their strategies, cultures, and people…
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Why do so many acquisitions and roll-ups look great on a spreadsheet—and then disappoint after the deal closes?
In this From The Ground Up Show: Topics episode, Charbel Louis Karam explains why revenue and EBITDA alone are not enough to justify an acquisition.
Two companies can serve similar customers, operate in the same industry, and appear financially complementary. But if their strategies, cultures, and people are not aligned, combining them can destroy value rather than create it.
Charbel compares acquisitions to building with LEGO blocks. The objective isn’t simply to collect more blocks. Each company must fit the larger strategy you’re trying to build. Otherwise, you aren’t creating an enterprise—you’re just piling businesses together on a profit-and-loss statement.
The consequences can be expensive. Conflicting strategies create erosion. Profitability declines. Resources that should have supported integration and growth instead get diverted toward replacing lost sales, cutting costs, and repairing damage.
That is why Charbel believes strategic and cultural alignment must be evaluated during due diligence, before the deal closes.
Leaders should ask whether the companies can genuinely row in the same direction, whether their strategies complement one another, whether their people and cultures fit, and whether one plus one can truly equal three. If the answer is no, why buy the company?
The same scrutiny applies when a founder plans to remain after an acquisition. Before closing, the buyer needs to understand whether the business can function without that founder and what role the founder should play going forward.
Within Charbel’s organization, founders who remained were encouraged to move from working in the business to working on it. Their responsibilities shifted toward exposing weaknesses, eliminating single points of failure, developing employees, and building operations that could succeed without depending on one extraordinary individual.
The numbers may justify examining a deal. Alignment should help determine whether you actually complete it.
Follow From The Ground Up Show: Topics in your podcast app, and share this episode with someone considering an acquisition or building a company through growth.
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