Kaplan and Weisbach tracked large acquisitions over decades and found that nearly half were later divested, yet on their accounting of outcomes only a minority of those divestitures looked like failures; many were profitable exits or sensible portfolio changes. The paper forces precision on a lazy debate: holding forever is not the definition of success, and selling is not the definition of failure.
The Institute’s reading: for private buyers this cuts both ways. It licenses honest exits, an acquisition that no longer fits can be sold without shame, and it sharpens the thesis discipline: if you can already imagine the divestiture, write down what would trigger it and what the asset must be worth to someone else. The best buyers underwrite the exit as carefully as the entry.