On the other hand, when done right, acquisitions can rapidly grow your company, setting you up for long-term success. Examples include Disney acquiring Pixar in 2006 in order to dominate the animated film business or Facebook acquiring Instagram to gain new users and develop mobile expertise.

For those of you who want to grow successfully through M&A, here are five of the biggest mistakes to avoid.

1. Lack of strategy

Failing to have a concise strategy is the number one reason acquisitions fail. Either firms have no strategy at all or they try to use one deal to fulfill multiple strategic needs. Both can hurt your chances of a successful acquisition. Without a firm grasp on why you are acquiring another business, it is easy to get pulled into doing a bad deal just for the sake of getting one done. On the other hand, if you are trying to fulfill multiple needs with one acquisition, you risk fulfilling none of them. Having a single, clear purpose for acquisition keeps you focused and generates results.

2. Planning as you go

If you start a journey without a map, you are probably going to end up lost in the woods. It is always best to develop a carefully planned strategy before jumping into pursuing deals. Most companies have a manual or instructions for hiring employees, but no acquisition roadmap even though it is much easier to hire and fire someone than it is to buy and sell a company. In particular, if you have never done an acquisition, following a plan will keep you on track and help you avoid pitfalls.

3. Evaluating one deal at a time

Only evaluating one deal at a time is like putting all of your eggs in one basket. If the deal falls apart, you have to begin the process from square one and you will have spent a great deal of time and money with nothing to show for your efforts. A better approach is to evaluate multiple prospects at the same time. Having multiple deals in the pipeline gives you more options and increases your likelihood for success. If a deal with company A does not work out, you still have company B, C, D, and E to fall back on as options.

4. Getting too emotional

Humans are not rational, logical and objective. We all have our biases and subjective perspectives, which can cloud our judgement. Acquisitions can be incredibly emotional and tense, even for the most level-headed executive. Sometimes leaders become blindly attached to a specific acquisition prospect, even though it is not a good fit for the company. One way to remain objective is to develop criteria and metrics and to benchmark your decisions. If the company you love is truly the right strategic fit, it should meet your criteria! If it does not, you may need to let it go. Objective tools allow you to take a step back and apply the same standard across all prospects. Naturally, there will be some level of emotion involved in M&A, but data, should be the ultimate driver of your actions.

5. Moving too slowly…or moving too quickly

It is essential to balance thoroughness with speed. If you move too slowly, you will lose deal momentum. If you move too quickly, you may miss critical details. We recommend going "slower" during the foundational part of the acquisition process when you are developing your acquisition strategy, criteria and team. Establishing a firm foundation will help you move swiftly in the later stages of the deal once you begin contacting and meeting with owners. Once an owner says "yes," your ability to respond quickly is essential to maintaining momentum and excitement. If you hesitate during this stage, the owner could become discouraged or lose interest in the deal. By preparing early and thoroughly at the beginning of the M&A process, you will be nimble during the later stages of the deal.

Acquisitions are a significant undertaking that can jumpstart you company's growth. Learn from the mistakes of others and make sure you avoid these common pitfalls in order to maximize your chances for success.

Do you have questions about acquisitions? We would love to hear from you. Contact us at 703-854-1910 or Growth@CapstoneStrategic.com.