Mergers and Acquisitions Revisited: The Role of Business Model Relatedness

Abstract

While the literature on corporate strategy has typically focused on examining diversification along the industry and geographical market dimensions, this study seeks to supplement previous research by introducing the concept of business model as a new way of thinking about diversification. Specifically, by integrating the literatures on business models, diversification, and acquisition strategy, we provide a conceptual analysis of how business model relatedness may influence performance implications of M&As. When business models among acquirers and targets are related, the sharing and transfer of superior resources may improve post-acquisition performance. In contrast, when business models among acquirers and targets are unrelated, internal and external identity conflicts may harm post-acquisition performance. Moreover, the conceptual framework developed in this study suggests that even if acquirers and targets are related in a product and geographical market sense, dissimilarities across business models may still harm post-acquisition performance. Overall, we suggest that using the recently emerged concept of business model may provide a new step in examining diversification decisions above and beyond the traditionally examined concepts of product and geographical markets, providing a more complete understanding of when and how multibusiness firms can create value.

Citation

Sohl, T. and Vroom, G. (2017), "Mergers and Acquisitions Revisited: The Role of Business Model Relatedness", Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 16), Emerald Publishing Limited, Leeds, pp. 99-113. https://doi.org/10.1108/S1479-361X20170000016006