General Electric
GE Alstom Power Acquisition
Estimated impact: $22B
GE acquired Alstom's power division for $10.6 billion in 2015, betting on continued growth in gas turbine demand. The acquisition coincided with a structural shift toward renewable energy, and GE ultimately wrote down $22 billion in goodwill. CEO Jeff Immelt's confidence in the deal suppressed internal dissent.
Decision context
Whether to acquire Alstom's power and grid business at a premium valuation while the global energy market was shifting from fossil fuels to renewables.
Biases present in the decision
Toxic combinations
- Sunk Ship
- Optimism Trap
Reference class base rates
Across all 146 curated case studies in our library:
Lessons learned
- Anchoring to historical gas turbine demand growth blinded GE to the accelerating energy transition.
- Sunk cost fallacy led GE to double down on power after the acquisition rather than pivoting when demand dropped.
- Overconfidence in integration capabilities led to overpaying for an asset in a declining market.
Source: GE 2018 Annual Report (goodwill impairment); Thomas Gryta and Ted Mann, "Lights Out: Pride, Delusion, and the Fall of General Electric" (2020) (SEC Filing)
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