Search results

This research fills a gap in the literature regarding managerial retention and performance in the context of cross-border acquisitions (CBA). Blending institutional with resource-based theories, this study posits that retaining acquired managers becomes more important in unfamiliar environments where the institutional infrastructure is underdeveloped. Our results support the theory. Contrary to expectations and prior research, however, the results also call into question the long-held belief that managerial retention is generally beneficial to post-acquisition performance. The findings and implications are discussed regarding managerial turnover, CBA, and the institutional environment.

Advisors play a key role in the mergers and acquisitions (M&A) process, but research to date has rarely focused on how their influence impacts these transactions. The present chapter takes stock of the present literature on M&A advisors from finance, economics, and management in order to integrate the currently diverging research traditions into a coherent framework. The current research has focused on proximal acquisition outcomes, like acquisition premiums or expected performance in the form of cumulative abnormal returns, but there is limited theoretical understanding of the advisors impact on the post-acquisition period. Moreover, while the role of advisor reputation has been highlighted on both the management and finance literatures as an important aspect of the role advisors play in the M&A process, there seems to be much to be addressed. Furthermore, and perhaps most importantly, the nature of the relationship between the advisor and the acquirer or target presents challenges to researchers where the advisor acts both as a provider of expertise in the M&A process, but may be simply acting on their own best interest. The new framework that the authors present here provides management scholars with a roadmap into a cohesive research agenda that can inform our theoretical understanding of the role of M&A advisors.

Despite the recent slow down in overall activity, acquisitions continue to be a popular growth strategy used by firms competing in a globally competitive marketplace (Duck, Sirower & Dumas, 2002). At the same time, acquisitions are more of a complex phenomenon than ever in that the conditions under which they enhance or destroy firm value still remain unclear despite the wealth of acquisition studies in finance and management. In fact, recent studies by several major consulting and advisory services firms provide evidence that at a minimum one-third to one-half of these deals fail to achieve anticipated benefits, cost savings and other outcomes (KPMG, 1999; Mergerstat, 2000; PricewaterhouseCoopers, 2000). Even more alarming, the latest reports released by Booz Allen and Hamilton (2001) and BusinessWeek (Henry, 2002) indicate that this “failure” to deliver announced benefits and improvements in shareholder wealth increases to over 60% when examining large M&As which typically bring together two firms that not only compete in similar product or market domains but also have comparable size positions. Thus, the question lingers…What distinguishes those acquisitions that are successful in meeting intended goals and performance improvements from those that are not successful?

In this study, the authors examine acquirers’ selection of legal advisors for mergers and acquisitions (M&A) transactions. The authors first confirm the importance of their own prior experience and imitation within this context. Then, the authors propose and find that firms with less experience in performing M&A deals place more emphasis on imitating others while firms with more experience with a particular legal advisor focus less on others’ experience with this advisor. The authors further find that when they imitate, firms selectively, rather than broadly, imitate others by focusing on their industry or state peers. The authors present corroborating evidence for these hypotheses through analyzing a matched sample of acquirer – legal advisor pairs developed from an initial dataset of 29,398 domestic and cross-border acquisitions performed by US firms between 2000 and 2010.