Despite numerous studies showing that the bulk of acquisitions are unsuccessful, many companies still believe they are great at it. The market often agrees at first, and then its tune changes to “I’ve come to bury Caesar, not to praise him,” as the deal’s flaws become obvious and the stock sells off.

There are some very basic rules of finance that get broken in some acquisitions. A key one is that the return on capital from the deal needs to exceed the cost of capital to pay for it. This becomes a bigger issue if interest rates rise. Many people grasp this quickly for consumer purchases. If a person can pay $1,000 per month for a house payment:

Acquisition prices for companies work the same way. When rates are low, prices rise and as rates increase, the value drops. Let’s look at some of these issues using Post Holdings (POST), and Conagra Brands (CAG) as examples of disappointing acquisitions.