Definition of Acquisition Indigestion
What is "acquisition indigestion"? What is the meaning of the term "acquisition indigestion"?
The term "acquisition indigestion" refers to when an acquiring company has trouble "digesting" another company.
One company will acquire another because they believe that the company that is being purchased will be a good fit and further strengthen their business. For instance, a golf club manufacturer might purchase a company that makes golf gloves because they want to expand their entire product line.
There are pitfalls that can come about from purchasing a company. These sorts of issues make up the term "acquisition indigestion". Think about it - if you eat something and it doesn't sit well in your stomach, then you will get indigestion. This is the same idea behind "acquisition indigestion".
Some of the issues that can spring up for a company that is purchasing another are: employees of the acquired company not being happy with the acquiring company, issues relating to the moving of operations from one location to another, management issues/power struggles, etc.
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