Don Dodge echos what I always thought; large acquisitions are usually not profitable.

" My experience is that small acquisitions (5 to 200 people) do in fact often result in synergy. I can only observe that large acquisitions, $1 billion and up, rarely result in significant synergy or leverage.  The Seattle Post Intelligencer has an interesting article about Microsoft acquisitions, comparing the size and number of acquisitions this year and previous years. "

From the sound of it, Don Dodge would probably have approved the merger of ClickTracks with J.L. Halsey announced earlier today. 

"I would agree that smaller acquisitions are about people and technology. The Groove Networks acquisition brought us Ray Ozzie and lots of other talented people.  The Onfolio acquisition brought us JJ Allaire and his talented team.  Of course the larger acquisitions bring outstanding talent as well. But sometimes the large dollar amount overshadow the individual contributions.

"…Microsoft is not alone in seeing the value of small acquisitions. Google Chief Executive Eric Schmidt told reporters at a conference last month that Google buys companies at a rate of one or two a week, many of them as small as one to three people."

But with big acquisitions, over 1 Billion, the formula for success is much more difficult to understand:

"Synergy and leverage are descriptive words that always come out when a company overpays for an acquisition. I started my tech career at Digital Equipment. At DEC whenever something was "strategic" what they really meant was, it is not profitable. I think synergy and leverage often fall into the same category. Fancy words for "this acquisition will pay off somehow at some point" and that "1+1=3".  Remember AOL and Time Warner? Or Compaq and DEC? Years later they are still looking for the synergy."

That pretty much says it.  the HP Compaq deal - a total waste, each company was stronger alone than merged.  There are thousands of stories like this an millions of jobs lost because of it.