Post-Acquisition Strategies, Integration Capability, and the Economic Performance of Corporate Acquisitions (original) (raw)
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1999
This paper introduces a knowledge-based view of corporate acquisitions, and tests the post-acquisition performance consequences of two capability-building mechanisms: experience accumulation and knowledge codification. In the model, the acquiring firm makes decisions about the level of integration and the degree of replacement of the target’s top management team, and can develop a capability to manage the post-acquisition integration process by tacitly accumulating acquisition experience and explicitly codifying it in manuals, systems and other acquisition-specific tools. In a sample of 228 acquisitions in the US banking industry, we find that experience accumulation fails to significantly impact performance, but that knowledge codification has a strong and positive influence. The impact of codification is also strengthened with increasing levels of post-acquisition integration, i.e. when the organizational challenge becomes increasingly complex. Finally, the level of integration be...
Post-acquisition Performance: Contingency of Acquisition Strategy
Procedia - Social and Behavioral Sciences, 2015
This paper concerns the relationship between acculturation in acquisitions (), the acquirer's acquisition strategy (), and organizational integration () between acquirer and target organizations, as well as their interactive effect () on postacquisition performance. The empirical results drawn by 154 acquisitions in the Taiwanese electronics and information sector reveal the existence of three-way interaction and show: (1) related acquisition with high degree of acculturation and integration is associated with high performance, whereas unrelated acquisition with low degree of acculturation and high degree of integration is associated with high performance; (2) organizational integration positively moderates the relationship between acculturation and performance; (3) integration has a stronger moderating effect in related acquisitions than in unrelated acquisitions.
Understanding the Performance of Corporate Acquisitions
SSRN Electronic Journal, 2000
This paper examines the concept of acquisition performance to develop and test a model linking the various ways in which scholars have studied it in the past. We propose a model linking task-, transaction-and firm-level constructs under different time horizons and test it with a unique dataset created surveying partners and directors of a major consulting firm advising on the post-acquisition integration process of 146 acquisitions across industries and geographies. Results of factor and structural equations (PLS) analysis reveal that (a) there is no single underlying factor on which all the 9 measures studied load, (b) a causal chain link integration process performance to long-term firm performance (both accounting and financial returns) through the mediating role of customer retention and of overall acquisition performance, and (c) short-term window event studies do not relate to any of the other performance metrics and load on a separate factor. Implications and recommendations are drawn for theory development, research design and data analysis in future studies of acquisition performance, as well as for practicing managers.
Mergers and Acquisitions: Post-Merger and Acquisition Integration Strategies
Post-merger and acquisition integration era is the period where planned and thought through, as well as contingent strategies are deployed with the aim of achieving the motive/s for the merger or acquisition. This is the make or break stage of the whole merger and acquisition process. The study was basically a review of literature on the various strategies that are employed at this stage of the merger and acquisition process. It was aimed at finding the strategies that are most appropriate for all situations. At the end of the day, it was concluded that no one strategy stands tall, and that the appropriate strategy depends on a number of factors such as type of the deal, cultural differences, sizes of the firms involved, human resources available, motive/s for the merger/acquisition, environmental/industry uncertainties, competition, profits envisaged, complementarity, compatibility, and so on. It was also concluded that success at the end of the day will in most of the time depend on getting it right from the beginning, as well as getting the " people thing " or " human factor " right, as is one of the major causes of merger and acquisition failure.
Organizational factors in post-acquisition performance
IEEE Transactions on Engineering Management, 1990
Post acquisition success of firms depends not only on the strategic fit between the merging firms but also on the organizational integration between them. Research in economics and finance has been focused on the stock market data and has neglected the impact of organizational variables on performance. The study reported here is based on 31 acquisitions for which data have been obtained from executives' in the acquired divisions as well as the corporate officers by structured interviews and questionnaires. The study shows a lack of relationship between the professed motives of acquisition and post acquisition performance. It seems that the lure of quick profitable growth through acquisition does not often materialize regardless of motive. The level of integration between the acquired division and the its parent is related with performance measured in terms of sales, profit, return on investment, market share growth, innovation, and broadening of customer base. The post-acquisition performance is also dependent on a variety of factors and assistance accorded to the division by the corporate Organization. Intensive communication between the acquired division and the other organizational units on technology, joint projects, etc. are key elements in sharing the strategic capabilities. Increased level of formalization in resource allocation and other management decision areas adversely affects performance. Turnover of key technical and managerial personnel negatively affects performance. Prior understanding of the business of the acquired firm by the acquiring organization is helpful in post acquisition period. Our study point to the old saying that there is many a slip between the cup and the lip. Management of acquired units need more understanding and an attitude of investment in future. Many organizations have rushed into the game of acquisitions without proper organizational considerations and paid for their mistakes.
Review of Literature Linking Corporate Performance to Mergers and Acquisitions
2009
There are inconclusive results on the literature on the consequences of mergers and acquisitions (M&A) on corporate performance as well as factors that might affect such identify synergies. This paper aims at synthesizing and analyzing prior literature of mergers and acquisitions and its effects on the financial performance in an attempt to determine factors that might influence post-mergers and acquisitions performance. Previous studies are using varieties of measures to examine the impact of M&A on corporate performance, where measures might be accounting measures-based, market measures-based, mixed measures, or qualitative measures-based. This study concluded that there is a dispute regarding the factors that affect the reported performance, where eight factors might affect performance as follows: (1) method of payment (Cash or Stock), (2) book to market ratio, (3) type of merger or acquisition transaction (related or unrelated), (4) cross-border versus domestic M&A, (5) mergers versus tender offers, (6) firm size, (7) macro economic conditions, and (8) time period of transaction. Managers should be aware of such factors and their impact on post-merger/acquisition corporate performance to accurately evaluate proposed offers of mergers and acquisitions and take sound decisions.
Exercises in the Strategy of Post-Merger Integration
Darden Business Publishing Cases, 2017
This case recounts the announced terms of five prominent acquisitions of the late 1990s, and asks the student to suggest a preliminary strategy for integrating the target firm into the buyer. The five acquisitions are America Online/Time Warner, British Petroleum/Amoco, Daimler-Benz/Chrysler, Union Pacific/Southern Pacific, and Warner-Lambert/Agouron Pharmaceuticals. The objectives of the case are: 1) to highlight the linkage of the post-merger integration approach with the strategic motives for the acquisition; 2) to consider the range of possible challenges to successful post-merger integration; 3) to explore the varieties of integration strategy, especially surrounding decisions about autonomy of the target company within the buyer, importance of interdependence between the buyer and target, and need for speed of integration.