Acquisitions are one of the most powerful tools for creating enterprise value — and one of the most frequently misused. The research on M&A is sobering: the majority of acquisitions fail to create value for acquiring company shareholders, and a significant portion actively destroy it. Yet acquisitions remain central to the growth strategies of many successful companies. Understanding what separates value-creating acquisitions from value-destroying ones is essential for any business leader or investor. Martin Sumichrast has led and participated in numerous acquisitions throughout his career, including a $135 million brand acquisition at cbdMD and a $600 million transaction at Adara Acquisition Corp.
When and how acquisitions create real value
Value-creating acquisitions share several characteristics. They are strategically coherent — the acquired business extends or strengthens the acquirer's competitive position in a way that is clearly articulated and defensible. They are priced with discipline — the acquirer pays a price that allows it to generate an acceptable return on the investment even under conservative assumptions about synergy realization. And they are integrated rigorously — the people, systems, processes, and cultures of the two businesses are combined in a way that preserves the value that existed in each and creates the synergies that justified the premium paid.
Key considerations
The most common causes of acquisition failure are overpaying, underestimating integration complexity, and overestimating synergies. Competitive auction processes create pressure to stretch on valuation; management teams that are emotionally committed to a deal are poor judges of whether the price being paid is reasonable. Integration is consistently underestimated: combining two organizations while continuing to run both businesses demands enormous management attention and organizational capacity that is often not available. And synergies are systematically overestimated in deal projections: cost synergies are harder to achieve than projected, revenue synergies typically take longer to materialize, and some predicted synergies never appear at all.
What this means in practice
Martin's approach to acquisitions reflects lessons learned across multiple transactions. Before pursuing any acquisition, he insists on clarity about the strategic rationale: what specifically does this acquisition enable that couldn't be achieved organically? He applies disciplined pricing analysis, stress-testing assumptions and modeling returns under conservative scenarios. And he takes integration planning seriously from the earliest stages of due diligence, identifying the key risks and decisions before closing rather than discovering them afterward. This discipline — being willing to walk away from deals that don't meet the standard — is what distinguishes consistent acquirers from those that make one damaging deal that takes years to recover from.