With few exceptions The Peter Principle always occurs. Managers at companies that are acquired typically are promoted to their level of incompetence, consultants come in with no knowledge of the direct business, and models are "smoothed and improved".
We watch this as restructuring business consultants, my original business, with smiles. It's a movie we've seen many times before.
When the buys are taking place there are several good quarters while the consolidation fudges the books, writes off everything, and meets projections.
Typically we can watch these stocks grow, with dividend, for about three years if their acquisitions do not continue, and up to five years if they continue to acquire before the Floydian Law #4578 comes into effect:
The company will exist on it's Powerpoint ability to communicate with one another, the financials will become "creative", a few at the top will do extraordinarily well, and Joe the conglomerate employee will be avidly investing in their company stock.
The "suits" have now taken over and law 4578 fills their days. There is no customer to these people, merely statistics on "revenue stream growth", or "organic growth".
By now the company has entered Dr. I. Adizes famed "lifecycle of a company". It's called the maturation period, and it's the beginning of the end.
Watch conglomerates and "roll ups" for the short run they can provide, especially in break out potential, and for the time to sell, just as the business magazines are telling you how "hot" the stock is.
