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A brief review of merger and acquisition (M&A) publications, while indicating high failure rates, also indicate that few studies have neither focused on the pre-merger period nor the contributions from leaders and managers, and especially during that period. Additionally, there are limited “behavioral due diligence” (BDD) assessment(s). This chapter begins with a brief overview of definitions. It continues with a data-driven presentation focused on the limited publications and research of M&A pre-mergers (compared with the post-M&A period). This is followed by discussions on M&A-related BDD and leader/manager tasks, activities, and issues. These dialogues set the foundation for M&A actions, and research, focused on leaders and managers relative to BDD in the pre-merger phase. This chapter will close with recommendations of “going forward” and a conclusion.

Scholars have been conducting serious research on the human, organizational, and cultural aspects of mergers and acquisitions (M&A) for 30 years. Yet, over this period, there have only been modest improvements in the M&A success rate. In this chapter, the author examines corporate combinations, describes how human factors contribute to their failure or success, and identifies key research questions whose answers can help to improve the M&A success rate in both financial and human terms. The author proposes research questions for the key phases of a deal, including buying a company and putting companies together. And, reflecting an emerging trend among some frequent acquirers to build an internal competence in M&A execution, the author also proposes research questions for how to accelerate the process of learning from past combinations to better manage future ones.

Cross-border acquisitions play an important role in corporate strategic development and international expansion. During the past decades, mergers and acquisitions have been intensively researched through the lenses of strategic management, corporate finance, behavioral finance, etc. Despite the intense effort, the progress made is still fragmented and lacks unifying theories that approach the entire acquisition process on the one hand, and in-depth research of critical factors on the other. The intent of the research paper is to establish a vital link between academic research and practice of mergers and acquisitions, especially regarding the pre-acquisition evaluation.

In detail, the research paper investigates critical factors – and their inclusion in the pre-acquisition due diligence, before decision about acquisition is made. Pre-acquisition due diligence theoretically conforms to organizational learning theory, which proposes the more the acquiring firm learns about the acquisition target, the higher the probability of a successful acquisition. The central hypothesis states that due diligence, including the critical factors, in the pre-acquisition phase is related to acquisition success.

Using a multidimensional measure of critical factors, the empirical evidence is based on 85 cross-border acquisitions that took place between 2007 and 2013 in the European automotive industry. The quantitative analysis finds positive association between the Choice of Strategic Partner, Business Capabilities and HR Knowledge, and Financial Factors and Acquisition Premium as critical factors of due diligence and acquisition success. The strongest relationship is between business capabilities and knowledge transfer as the main asset for realization of synergy values and successful acquisition. In this context, the valuation of the business capabilities of the acquisition targets is classified as the main challenge for reflecting suitability of the acquisition price and establishing value generation from the combined firms in the post-acquisition phase.

By studying acquisition risk and critical factors – both success and failure reasons – this research tested and proved theoretically sound framework for successful acquisition. From a practical standpoint, the research results provide acquisition management with a proven model for pre-evaluating acquisition candidates by means of comprehensive due diligence.

Due diligence refers to a comprehensive process of investigating and evaluating business opportunities in mergers and acquisitions. While early-stage due diligence usually encompasses financial and strategic assessment, one of the most important things in due diligence is looking at organizational culture at an early stage. This chapter takes stock of the existing research and practice in the area of cultural due diligence and evaluates the strengths and limitations. Based on the review of literature, we developed a framework for cultural due diligence to address the limitations of existing approaches. The framework illustrates a process to screen the M&A targets, gain insight into the target firm’s culture, and identify integration challenges. The process starts with more unobtrusive, indirect, and informal assessments of the target firm’s culture and moves onto more obtrusive, direct, and formal assessments.

This chapter examines recent practices being adopted in the Precombination Phase of a merger or acquisition–a period that typically has not been utilized by leaders to put deals on the track toward success. We begin by briefly reviewing the M&A process and highlighting the success factors and common problem areas in each of the three phases of a deal. We then discuss emerging trends in making the Precombination Phase more successful, including conducting a more thorough due diligence, setting a vision for the combined organization, accelerating early integration planning, and establishing integration principles and priorities.

The potential for resource combinations to have adverse consequences for acquiring firms is often overlooked in research. However, considering potential inimical resources can explain target and acquiring firm actions across the phases (evaluation, completion, and integration) of an acquisition. The authors outline how managers deal with inimical resources in acquisitions. Specifically, during evaluation, due diligence offers managers from acquiring firms the opportunity to avoid potential inimical resources by abandoning an acquisition. During integration, inimical resources can be dealt with either by limiting integration, or with planned or unplanned divestment. As a result, inimical resources explain observed actions and provide a context for making and improving corporate restructuring decisions.