Acquirer’s Hubris: The Recipe for M&A Failure

My wife and I recently had breakfast at a favorite haunt.  As usual, there was a wait for a table. When our names were added to the list, I provided my cell phone number so the restaurant could text us when our table was ready. The first sign that the restaurant was under new ownership came with that text—it included a link to a corporate privacy policy. The more telling evidence, however, came with the meal itself.

The once-celebrated poached eggs atop braised short ribs with caramelized onions—a dish that had become their signature—was now unrecognizable. The short ribs were tough, the onions undercooked, and the eggs small and rubbery. The omelet we ordered was no better; it tasted as if made from egg substitutes, devoid of the farm-fresh flavor we had come to expect. When we raised our concerns, our server—a stranger to the restaurant’s long-standing culture of warmth—rebuked us for not complaining sooner, explaining that the food could have been used “for training purposes.” Needless to say, we will not return.

What we experienced is a familiar story in corporate acquisitions. A buyer purchases a thriving business—a market leader that had repeatedly outperformed competitors—only to impose its own systems and practices, dismantling the very qualities that made the target successful. Rather than observing and learning from the former owners, who had built a loyal following and an efficient operation, the acquirer rushes to remake the business in its own image, eliminating the “secret sauce” that set it apart.

This is the essence of acquirer’s hubris: the misplaced confidence that capital, scale, and prior success automatically translate into better management and higher customer satisfaction. Time and again, this arrogance undermines acquisitions that, on paper, promised extraordinary synergies and returns.

The Recipe for Failure

Consider that restaurant. For decades, it flourished under family ownership. The menu was curated with care, ingredients sourced locally, and staff treated like family. The new ownership—likely a restaurant group or private equity-backed operator—approached the acquisition with spreadsheets forecasting efficiencies and economies of scale. Yet the data could not capture what truly mattered: the relationships, intuition, and pride that fueled the business. By replacing judgment with process and autonomy with oversight, they extinguished the spark that made the restaurant special.

The same dynamic plays out across industries. Technology companies, manufacturers, and professional services firms alike see once-promising acquisitions falter. The acquirer’s systems, culture, and hierarchy are imposed wholesale, marginalizing the very human capital that drove the target’s success. Customers, sensitive to subtle changes in quality or service, quickly take notice. Revenues decline, margins shrink, and the post-merger spreadsheets start to look more like wishful thinking than business plans.

The Cost of Arrogance

Empirical research bears this out: a majority of mergers and acquisitions fail to deliver their anticipated returns. The root cause is not always flawed strategy or poor diligence—it is often cultural arrogance. The belief that “bigger knows better” blinds acquirers to the strengths they are acquiring. Integration becomes a process of homogenization rather than improvement.

The Antidote: Humility and Patience

As a corporate attorney who has spent the better part of my career advising companies on understanding some of the lesser understood elements of mergers and acquisitions, I can say firsthand that the best acquirers understand that success cannot be imposed; it must be cultivated. They begin with respect for what they are buying and a willingness to learn. They move deliberately, making changes only after observing what truly works. Integration, done right, becomes a dialogue rather than a takeover—a two-way exchange of ideas, practices, and values.

Berkshire Hathaway provides a powerful example. When it acquires companies, it famously allows them to operate autonomously, preserving their management teams and cultures. Its philosophy is simple: buy well-run companies and let them continue doing what they do best. That humility—recognizing that expertise resides in the acquired business itself—is precisely what keeps Berkshire’s portfolio companies thriving.

The Prepared Seller

Understanding what sets them apart is imperative for restaurateurs and their advisors seeking to sell the business.  Some of these characteristics–such as a spirited hostess and wait staff, celebrities frequenting the restaurant or perhaps stocking a brand of spirit that originated in the vicinity–are intangible and not susceptible of precise measurement, while others can be captured and quantified.  Being able to articulate how sourcing strategies, employee recruitment, training and retention programs, layout of the physical space, and the role of the chef or chefs have combined to deliver superior results create a compelling narrative.  

All of these qualities, both tangible and intangible, should be captured in the confidential information memorandum that is prepared to market the restaurant.  While a renowned chef may attribute his culinary excellence to feel and touch free of the constraints of recipes, an owner of a restaurant seeking top dollar from a buyer is well advised to know and be able to write down the exact recipe that has produced superior operating results. 

A Lesson Served Cold

Returning to that disappointing breakfast, the metaphor is clear. The restaurant’s new owners had acquired not just a menu, but a legacy—a loyal clientele, a vibrant staff, and a tradition of excellence. In their haste to standardize, they destroyed the essence of what they bought.

The same holds true in business. When you acquire success, you must first understand it before you can sustain it. Acquirer’s hubris—the conviction that one’s own methods are universally superior—is a recipe for failure. True mastery lies in knowing when to lead, when to follow, and, above all, when to simply let excellence continue undisturbed.