Why We Acquire: Motives Before Targets
How acquisition motives quietly shape which targets ever get considered
Target selection is often discussed as if it begins with companies.
A list of potential targets is assembled.
Fit is assessed.
Diligence is performed.
A choice is made.
In practice, the most important decisions in target selection occur before any specific company is ever evaluated.
They occur when leaders decide why they are acquiring in the first place.
Acquisition Is a Strategic Act, Not a Transactional One
Acquisitions are rarely opportunistic in the pure sense. Even when a deal emerges unexpectedly, it is interpreted through an existing strategic lens.
That lens is shaped by a prior judgment:
what the firm is trying to build that it cannot build easily on its own.
This is where the Resource-Based View of the firm is useful — not as theory, but as orientation.
At its core, RBV suggests that firms seek advantage by controlling resources and capabilities that are:
valuable,
difficult to replicate,
and not easily acquired through markets alone.
From this perspective, acquisitions are not just a faster growth path. They are a way to reconfigure the firm’s resource base.
Seen this way, target selection does not begin with targets.
It begins with capability intent.
The Commercial Motives Behind Acquisition
Most acquisition programs are driven by a small number of recurring commercial motives. These motives quietly shape what “fit” means long before diligence begins.
Common motives include:
Capability or Product Complementarity
The firm acquires to add capabilities it lacks — technologies, products, or know-how that would take too long or be too uncertain to develop internally.
Here, the question is not whether the target is attractive in isolation, but whether its resources can be integrated and leveraged within the existing platform.
Customer or Channel Expansion
Some acquisitions are motivated by access rather than capability: new customers, end markets, or routes to market.
In these cases, value depends less on integration depth and more on whether cross-selling and coordination are realistic rather than assumed.
Geographic Expansion
Geography is often treated as a surface-level motive, but it carries deep organizational implications.
Geographic acquisitions test the firm’s ability to replicate operating models, manage distance, and absorb institutional and cultural variation — challenges that cannot be diligenced away.
Density and Scale Economics
Other acquisitions aim to deepen presence within an existing footprint, increasing density, utilization, or bargaining power.
These deals often look “safe” on paper, but they still alter operating cadence and integration load.
Each motive implies a different theory of value creation — and, critically, a different tolerance for complexity and uncertainty.
Motives Pre-Select Targets
Once acquisition motives are set, the universe of plausible targets narrows dramatically.
This narrowing often happens implicitly:
certain industries become “strategic,”
certain business models are deemed incompatible,
certain risks are tolerated while others are excluded.
By the time a formal target list is assembled, much of the selection work has already occurred.
This is why two firms can look at the same company and reach opposite conclusions — not because one is right and the other is wrong, but because they are trying to build different things.
Target selection is therefore not just evaluative.
It is interpretive.
Platform Selection Is a Different Decision
This distinction becomes especially important in buy-and-build strategies.
Platform selection is governed primarily by industry structure and long-term economics:
competitive intensity,
customer power,
supplier dynamics,
and the availability of attractive add-ons.
This is where Porter-style thinking belongs.
Add-on selection, by contrast, is governed by interaction with the existing platform:
operational overlap,
integration burden,
leadership bandwidth,
and sequencing considerations.
Conflating platform selection with add-on selection leads to confusion — and often to misapplied diligence standards.
They are different decisions, guided by different logics.
Target Identification Comes Before Target Selection
Once motives are clear, firms move into target identification — the process of defining what kinds of companies could plausibly advance the strategy.
This is a search and framing activity, not yet a decision.
Target identification asks:
What characteristics matter given our motive?
Where are we willing to accept uncertainty?
What constraints are non-negotiable?
Only after this framing does target selection begin: choosing among specific companies under uncertainty.
Collapsing these stages obscures where judgment actually enters the process.
Why This Distinction Matters
Most post-mortems focus on diligence failures or integration challenges. Less attention is paid to whether the acquisition motive itself was coherent or stable.
When motives are unclear, target selection becomes reactive.
When motives are overly broad, diligence becomes unfocused.
When motives are mismatched to organizational capacity, even “good” targets strain the system.
Understanding why you are acquiring does not eliminate risk.
But it sharply improves the quality of the risks you choose to live with.
What Comes Next
This section will continue by examining how firms move from identification to selection — and how concepts like fit, distance, and uncertainty shape that transition.
But the foundation matters.
Before asking whether a target is attractive, the more important question is:
what are we trying to build that makes this target meaningful at all?