A combination of low interest rates, ready financing, and a strong economy have encouraged more and more midsize companies to seek growth through merger and acquisition (M&A). As a result, companies are using acquisitions to increase market share, broaden product offerings, enter new geographic markets, access emerging technology or intellectual property, and expand into new distribution channels.

Over the last 20 years, I have seen hundreds of M&A transactions succeed -- and more than a few fail. What can go wrong? Here are five of the most common pitfalls, along with strategies for avoiding them.

#1: Poor strategic fit

Oftentimes, an M&A transaction does not work because a company has strayed outside its core competencies -- the markets, products, customers, and technologies that it knows best. Sometimes, these differences are subtle. Daimler-Benz and Chrysler, for instance, both made cars, but served dramatically different customer bases with very distinct price and quality expectations. At other times, the differences are more blatant, as when a department store chain buys a brokerage firm, perhaps hoping to sell socks and stocks in the same aisles. Before settling on an acquisition target, acquirers must take a hard look at their core strengths, weaknesses, and strategies for growth. Instead of buying a company because it is available or attractive in its own right, make sure the acquisition fits into your company's overall strategy.

#2: Culture clash

Another problem occurs when you buy a company for its people -- research and development teams, technical experts, top sales people, or seasoned creative talent -- and then fail to provide an environment in which they can flourish. If you are not cautious, you could end up losing the people and owning the furniture. To avoid this pitfall, you need to ensure that your due diligence incorporates not only the hard numbers, but also the intangibles like culture and corporate structure. During the integration process, be sensitive to the expectations of the people whom you want to retain. Within reason, allow these professionals to maintain the culture that keeps them productive, even if it differs from your own. And, finally, don't expect to be able to make really radical adjustments. If the cultures are too different, you may just want to scrap the acquisition.

#3 Due diligence mistakes

Transactions can also fail because of problems that are not uncovered or are misjudged during your due diligence process. There are many ways to make mistakes in this regard. For example, at the time of the deal, you simply may not be aware of certain issues such as new competition or changes in the regulatory environment. Second, in some cases, you may have identified a potential problem, but misjudged its importance and decided to go ahead with the transaction anyway. Let us say, for example, that a lawsuit is pending against the company you are buying. Because your lawyers assure you that the case is likely to go in your favor, you buy the company -- and then lose the case. Careful due diligence could minimize such unexpected events, but it will not eliminate them. A degree of judgment and risk will be inherent in almost every M&A transaction.

#4: Betting the whole company

A fourth pitfall arises when an acquisition is so large or costly that its size or cost impacts the rest of the company in a negative way. For example, your company may have a high rate of growth. If you buy a large company that is growing much more slowly, that acquisition could drag down your entire firm's growth rate and could potentially negatively affect its valuation as well. Or, perhaps you take on too much leverage to buy a large company, and then have to cut back on growth initiatives to make your interest and principal payments. Most entrepreneurs are careful not to make acquisitions that jeopardize their core businesses. However, with financing so easy to come by these days, your company could be easily swept up in grand growth strategies that ultimately undermine your success.

#5: Not allocating enough resources

Successful acquirers treat their M&A activities as another business line. They make sure that they have experienced people in place for every stage of the deal -- from identifying acquisition candidates to performing due diligence to structuring deals to integrating the acquired company into their own. If you plan on acquiring a large number of companies, you should first establish a formal corporate development group that can handle smaller transactions on its own; then you can work closely with senior management on the larger transactions. You also may want to create a working team for integration, making sure that acquired companies will fit into your firm's overall strategy and operating structure.

When executed properly, M&A deals can be an important element of a company's growth strategy, allowing you to expand into new markets, product areas, and distribution channels. By ensuring that your transactions are aligned with corporate strategy, carefully investigated, thoughtfully integrated, appropriately sized, and sufficiently resourced, you can increase the success of your M&A program.

Bruce R. Evans is a Managing Partner in Summit Partners' Boston office. He has served on the boards of more than 25 public and private companies, many that grew through mergers and acquisitions.