M&A: Lessons from Morrow Snowboards' $15 Million Mistake
- Celine Nguyen, CFA
- Apr 29
- 5 min read
Updated: Jul 30
M&A is often used to expand, scale, enter new markets, or build strategic moats. But sometimes, M&A is about something much more desperate: survival. Survival-driven M&A is brutal. If you get it wrong, it doesn't buy you life - it buys you a faster death. In this post, we’ll explore a real-world survival M&A that ended badly: the story of Morrow Snowboards spending its last $15 million to acquire WestBeach, the company founded by Chip Wilson, who would later establish Lululemon. Then, we'll look at examples of survival M&A that worked and extract lessons that business builders need when the pressure is on.
Case Study: Morrow Snowboards Buys WestBeach
In Little Black Stretchy Pants: The Story of Lululemon, Chip Wilson recounts the final days of WestBeach, the snowboard apparel brand he spent 18 years building before what he later called a "lucky" exit. By the late 1990s, the snowboard market entered a brutal phase of commoditisation. Innovation dried up. Products started to blur together. Consumers stopped seeing uniqueness; they saw sameness and bought purely on price.
The consequences?
Endless price wars.
Mergers and acquisitions everywhere as companies scrambled to survive.
Public snowboard companies, like Morrow, faced intense pressure to show quarterly sales growth to investors.
Morrow’s situation was even worse. They had lost major Japanese distribution deals, a huge blow to their revenue engine. Desperate for a fix, Morrow made a fateful move: They decided to buy WestBeach for $15 million.
Why the Acquisition Was a Fatal Mistake
According to Wilson, Morrow made the decision based purely on brand value, not financial fundamentals. This was a critical error. Behind the scenes, WestBeach was bleeding:
It had zero profit. They made $1 million on the two retail stores but lost $1 million on the international wholesale business, resulting in net zero profit.
The company was four days from missing payroll.
Morrow, astonishingly, made the $15 million acquisition without a CFO. There was no financial discipline, no clear-eyed deal evaluation - exactly when they could least afford a mistake. But the biggest mistake wasn’t buying a struggling brand. It was spending their last $15 million to do it.
That $15 million wasn’t surplus cash. It was Morrow’s last war chest. Once they wired the money, they had no room to maneuver, no cushion for mistakes, and no time to fix deeper structural problems. They bet everything on a miracle that never happened.
What Happened After the Acquisition?
Disaster ensued. Integration was messy. Cash ran out. Chip’s role at Morrow - focused on future business development - ended after just eight months. Morrow failed not long after. The WestBeach acquisition didn’t save them. It didn’t fix the revenue shortfall. It didn’t restore lost Japanese sales. And it didn’t create new profitable channels. It just drained the little runway they had left and accelerated their collapse.
Why Survival M&A Often Fails
The story of Morrow and WestBeach illustrates why survival-driven M&A is so dangerous:
Buying revenue is not the same as fixing a broken business model.
Spending your last cash reserves leaves no margin for mistakes.
Buying under pressure, without strategic clarity and post-acquisition breathing space, often accelerates collapse.
Morrow didn’t buy new capability. They didn’t solve their distribution problem. They bought a brand and hoped the numbers would work out later. They didn’t.
Survival M&A: When It Works
Survival M&A isn’t always a death sentence. There are times when acquiring the right company - at the right time, in the right way - can transform a business. Here are three real-world examples where survival-driven M&A worked:
1. Facebook Buys Instagram (2012)
In 2012, Facebook was facing a massive existential threat. The mobile landscape was booming, and Facebook's app was outdated, losing ground. Meanwhile, Instagram, a beautiful photo-sharing app, was capturing mobile users like wildfire. Zuckerberg knew: if Instagram kept growing independently, it could eventually replace Facebook as the dominant social platform for a new generation. Rather than risk that, Facebook bought Instagram for $1 billion - an immense sum for a startup with barely 13 employees and no revenue.
Why it worked:
Facebook kept Instagram's brand and team independent.
They invested resources without stifling its creativity.
They secured mobile dominance and neutralized a potential threat.
Key Lesson:
In survival mode, sometimes you have to buy your future enemy before they become unstoppable.
2. Amazon Buys Zappos (2009)
While Facebook reacted rapidly to neutralize a threat, Amazon faced a different survival challenge during the 2008 crash. They needed to secure vulnerable categories before someone else did. During the financial crisis, Amazon wasn’t yet the behemoth it is today. Consumer spending plummeted. E-commerce remained a fragile bet. Competitors like Zappos were starting to dominate the shoe category, where Amazon was weak.
Amazon saw the risk: if they didn’t control categories like footwear, competitors would. So, they acquired Zappos for ~$1.2 billion - not to crush it, but to expand their footprint.
Why it worked:
Amazon preserved Zappos' unique culture.
They secured category leadership without messy integration.
Zappos became a long-term growth engine.
Key Lesson:
Survival M&A works when you expand your power without stifling what made the target special.
3. Bank of America Buys Merrill Lynch (2008)
During the 2008 financial crisis, Bank of America faced serious threats. The global banking system was on the brink of collapse. BofA's core mortgage business was deteriorating quickly. They needed to enhance their investment banking and wealth management capabilities fast. Merrill Lynch, a renowned name on Wall Street, was struggling from bad mortgage bets but still had one of the strongest client bases.
Bank of America seized the moment and acquired Merrill Lynch for $50 billion amid market chaos.
Why it worked:
BofA didn’t just buy distressed assets; they secured Merrill’s relationships and brand prestige.
They had sufficient financial backing to survive integration pains.
They acted quickly while others hesitated.
Key Lesson:
Survival M&A is effective when you secure critical capabilities and have the capital to weather the pain.
Lessons for Survival M&A
When the stakes are high, survival M&A can succeed. But it must be executed with brutal discipline. Here’s what separates success from failure:
1. Buy Strategic Capability, Not Just Revenue
Morrow bought a brand but didn’t solve their broken distribution.
Bank of America focused on acquiring client relationships and capabilities.
Lesson: Solve the root problem, not just surface numbers.
2. Keep Financial Breathing Room
Morrow exhausted their last cash reserves.
Bank of America had enough capital and federal support to endure integration challenges.
Lesson: If you spend your last dollar on the deal, you won’t survive the aftermath.
3. Ruthless Post-Acquisition Execution
Successful survival M&A demands rapid, decisive integration.
Delay often leads to failure.
Lesson: Move swiftly. Cut quickly. Pivot efficiently.
Final Takeaway
In survival M&A, you aren’t buying growth; you’re buying a second chance. But that chance only materializes if you:
Resolve the real strategic problem.
Maintain operational and financial breathing room.
Integrate with brutal efficiency.
Otherwise, you risk swapping one kind of death for another. Morrow Snowboards spent $15 million trying to survive. It didn’t buy them life. It bought them a faster end. Understand the difference, or learn it the hard way.
About Zenify Investments
Zenify Investments is a boutique buy-side M&A advisory firm specialising in the $1M–$50M SME acquisition market. Based in Sydney, we advise CEOs, boards, investors, and growth-focused owners who use acquisitions not just to grow - but to build businesses that are stronger, more defensible, and more valuable over time. Our work spans the full M&A lifecycle - from target sourcing and market intelligence to valuation, risk assessment, and deal completion.
With Zenify, you get Speed in Execution, Clarity in Risk, and Conviction in Value. Reach out to discuss how we can support your next acquisition - and help you buy like the future depends on it.
