A stretched supply line has led to many well-known military debacles. You can see it now, the overconfident General, racing as fast as he can to his target. The supply chain behind him is unable to keep up, he still pushes on. At first, his speed catches his enemy by surprise and the tactic works. One victory follows the other, his success seems inevitable. Eventually, however, disaster strikes. He has stretched too far. His troops find themselves bogged down, without supplies, and inevitably are defeated.
The same happens in business when a rush to get somewhere leads us to stretch our resources. Rather than take a slower more dependable route, we race ahead throwing caution to the wind.
Leverage is receiving something you have not yet earned. It is trying to get somewhere fast. Some future place, size, thing. I am selling $1m and want to get to $10m fast, take on leverage. I am at $10m and want to jump to $100m, leverage will get me there quicker. The problem is leverage also weakens the structure. It introduces fragility into the system. Just like racing ahead to a military target, the company becomes weaker due to the nature of the speed taken. It is much easier to defeat a leveraged company just like it is much easier to defeat a stretched military.
Rapid-fire acquisitions also stretch us too thin. I see this more in vertical HoldCo roll-ups, but it happens in horizontal HoldCos as well. A strategy where people are doing multiple acquisitions a year or even multiple acquisitions a month. The bandwidth to onboard these operations, handle relationships with employees and customers, to meet providers, gets strained. The team gets stretched too thin. Details are missed. Care and quality are not given. This leads to a large company via acquisition made up of weak pieces. The cracks are not seen many times until it is too late. Again, rather than taking a slower, more dependable route, they want to get there now. They want speed, rather than sustainability.
Breakneck growth within an existing operation. Opening multiple new locations or geographies at the same time will stretch your operating capabilities thin. Your product or service begins to suffer. The customer notices something is not right. Before you know it, you are ready to be defeated. You have stretched your operating team too thin; they cannot keep up with the growth. Rather than build out at a reasonable pace, allowing operations to keep up, you have charged ahead trying to achieve some size target which does not matter if the entire company suffers.