When it comes to business, bigger is sometimes much better. The evolution of some of the most successful companies entails gaining market share by – in some instances – merging with or acquiring the competition or partner. And there have been many successful and failed mergers and acquisitions in the U.S. market.
Disney and Pixar combined forces in 2006, allowing the two companies to collaborate freely and easily. Just a few products of the coupling were the hugely successful “WALL-E,” “Up” and “Bolt.” And what about Exxon and Mobil, two oil giants that signed an $81 billion merger agreement in 1999? That move created the largest company in the world, so big in fact that the FTC required a massive restructuring of many of Exxon and Mobil’s gas stations in order to avoid complete monopolization of the fuel industry.
But there are also the failed M&As that have gone down in history. Remember Mattel and The Learning Company? In 1999 Barbie-maker Mattel scooped up educational software maker The Learning Company in a $3.6 billion deal. Less than a year later, The Learning Company lost $206 million, bringing down Mattel’s profits in the process. There was also Quaker and Snapple. In 1994, old-school oats maker Quaker purchased Snapple for $1.7 billion, with grand plans to make Snapple as prevalent as Coke or Pepsi in stores across the globe.
The lesson: Not all business marriages work – and that holds true for the health care industry as well. Possibly, the most notorious of hospital mergers is that of Massachusetts General Hospital and Brigham and Women’s Hospital, two Harvard-affiliated hospitals that joined forces in 1994. Though touted as a move towards greater efficiency and quality of care, the merger proved to be more market dominating and costly to patients. The merger was supposed to take away the ability of insurance companies to demand lower prices from one hospital with the threat that they could just send patients to the other. However, after the merger, insurers had to take both of them or neither.