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Book part
Publication date: 2 September 2009

Dries Faems and Anoop Madhok

Transitional governance trajectories – i.e. trajectories in which an established firm first engages in equity collaboration with an entrepreneurial firm and subsequently…

Abstract

Transitional governance trajectories – i.e. trajectories in which an established firm first engages in equity collaboration with an entrepreneurial firm and subsequently acquires the entrepreneurial firm – are becoming an increasingly popular strategy for established firms to get access to novel and pioneering technologies. In this chapter, we critically assess the existing literature on transitional governance trajectories. In particular, we rely on insights from the existing alliance and acquisition literature to question three implicit assumptions (i.e. established partner is the dominant partner in transitional governance trajectories; established partner behaves as a passive financial investor during pre-acquisition collaboration and post-acquisition integration is likely to proceed smoothly) that are applied by existing studies on transitional governance. On the basis of this critical assessment, we identify theoretical, methodological and managerial challenges for future research on transitional governance.

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Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-84855-781-9

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Article
Publication date: 18 April 2017

Manuel Portugal Ferreira, Felipe Borini, Simone Vicente and Martinho Ribeiro Almeida

The purpose of this paper is to focus on the pre-acquisition process and, specifically, how the complexity involved in the transaction may drive the temporal gap between…

Abstract

Purpose

The purpose of this paper is to focus on the pre-acquisition process and, specifically, how the complexity involved in the transaction may drive the temporal gap between the formal announcement and the completion of the deal. The authors emphasize the time (in days) between announcement and completion.

Design/methodology/approach

The empirical setting consists of the cross-border acquisitions (CBAs) of Brazilian firms by multinational corporations announced between 2008 and 2012. Using a sample of 741 acquisitions, the authors examine how institutional (cultural and regulatory) and technological complexity and the predictable mitigating effect of prior acquisition experience in Brazil all impact on the time needed for evaluating the target and negotiating.

Findings

The results show that these complexity factors do matter for hastening the process and that recent experience with acquisitions in Brazil shortens the time needed to completion.

Originality/value

This study contributes to the literature on the acquisition process and the uncertainty and complexity factors in CBA in an emerging economy.

Details

International Journal of Emerging Markets, vol. 12 no. 2
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 1 February 1991

Philippe C. Haspeslagh and David B. Jemison

Better management of the pre‐acquisition decision‐making and the post‐acquisition integration processes can improve an acquisition's potential to contribute to strategic renewal.

Abstract

Better management of the pre‐acquisition decision‐making and the post‐acquisition integration processes can improve an acquisition's potential to contribute to strategic renewal.

Details

Planning Review, vol. 19 no. 2
Type: Research Article
ISSN: 0094-064X

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Article
Publication date: 11 January 2016

Giuseppe Davide Caruso, Elisa Rita Ferrari and Vincenzo Pisano

The purpose of this paper is to understand whether managerial behavior in impairing goodwill arising from M & As has changed after the adoption of IAS/IFRS…

Abstract

Purpose

The purpose of this paper is to understand whether managerial behavior in impairing goodwill arising from M & As has changed after the adoption of IAS/IFRS, searching for evidences of earnings management (EM) practices. Thus, our goal is to provide a response to the following research questions. Are goodwill impairments used by listed firms’ managers to manipulate earnings? If so, what kind of EM practice is mostly used?

Design/methodology/approach

In this paper the authors tested the following hypothesis: H1. In the year of the deal’s closure and in the following four years, the management detects impairment of goodwill in difformity with the previous Italian regulations and related accounting practices. Moreover, the authors tried to determine, for each considered firms, potential symptoms of typical DEM practices widely debated in the financial accounting literature (income smoothing, income minimization, income minimization, or big bath accounting).

Findings

Our analysis does not prove evidence of certain EM practices, but it highlights very clearly that, after the adoption of IAS/IFRS, managers’ behavior has deeply changed. Moreover, the analysis shows that there is no univocal choice in favor of a specific EM practice and that every firm pursues its own “strategy.”

Originality/value

Considering the importance of the topic from both the perspectives of managerial (with regard to M & As valuation processes) and financial accounting (with regard to intangibles valuation fulfilled by applying the impairment test instead of the amortization), this work aims to provide a multi-dimensional contribution to the current debate.

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Journal of Intellectual Capital, vol. 17 no. 1
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 17 August 2015

Raffaele Fiorentino and Stefano Garzella

The purpose of this paper is to advance a conceptual comprehensive framework to analyze synergy management pitfalls in mergers and acquisitions (M & As). The…

Abstract

Purpose

The purpose of this paper is to advance a conceptual comprehensive framework to analyze synergy management pitfalls in mergers and acquisitions (M & As). The framework highlights the main dimensions of synergy management, the most relevant synergy pitfalls and the ways to overcome them.

Design/methodology/approach

A greater recognition of synergy management literature in M & As is developed. A framework is provided integrating the compatible elements of previous broad areas of research and the main findings of studies on several topics related to synergy.

Findings

Prior literature has suggested that synergy is an important motivation of M & As, has tended to be overestimated and has been difficult to achieve. Specifically, there are three relevant synergy pitfalls: the “mirage,” a tendency to overestimate synergy potential, the “gravity hill,” the underestimation of the difficulties in synergy realization and “amnesia,” a dangerous lack of attention to the realization of synergy. An effective synergy management requires an analysis of five dimensions: the steps of the M & A process, the several values of synergy, the forbidding effects of poor synergy management, the potential causes of synergy inflation and the selection of solutions to synergy pitfalls.

Practical implications

The comprehensive framework suggests insights and guidelines to help managers to overcome pitfalls in synergy management. Managers will learn the following lessons: “when” pitfalls should embrace synergy management; “where” pitfalls may occur; “why” pitfalls may occur; “what” consequences can result in a value of “realized synergy” lower than the “expected synergy”; and “how” actions, tools and behaviors can overcome hidden dangers in synergy management.

Originality/value

The study changes the focus from a single, generic synergy trap to three more analytical, useful synergy pitfalls: the mirage, the gravity hill and the amnesia. By shedding light on synergy management pitfalls, this paper enriches M & A literature and enhance practical solutions to reduce pitfalls in synergy decision making.

Details

Management Decision, vol. 53 no. 7
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 4 January 2012

Dries Faems

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have…

Abstract

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have recently argued that firms can also engage in transitional technology sourcing trajectories where collaboration and acquisition are used as complementary strategies. While these real option scholars have identified factors that influence when partners are likely to shift from collaboration to acquisition, they remain silent on how such a transition can be effectively managed. Based on a multiple case study of four transitional technology sourcing trajectories between one new entrepreneurial and one established firm, this study therefore explores how the pre-acquisition collaboration stage and the post-acquisition integration are related to each other. Findings suggest that entrepreneurial companies may use the pre-acquisition collaboration stage as a period to evaluate the goodwill of the established partner. In addition, we point to the presence of pre-acquisition integration efforts and the extent of strategic convergence during the pre-acquisition collaboration stage as factors that substantially influence the success of the post-acquisition integration process in transitional governance trajectories.

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New Technology-Based Firms in the New Millennium
Type: Book
ISBN: 978-1-78052-118-3

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Article
Publication date: 19 February 2018

Jyoti Rao, Piyush Tiwari and Norman Hutchison

Property often forms the biggest component of household wealth and assets. Irrespective of landowners’ willingness, the act of compulsory acquisition abruptly ceases the…

Abstract

Purpose

Property often forms the biggest component of household wealth and assets. Irrespective of landowners’ willingness, the act of compulsory acquisition abruptly ceases the security that this ownership carries. This often induces dissatisfaction among affected landowners over the: loss of “property rights”; loss of commodity, or property; and loss of future opportunities associated with the property. Though there have been attempts in various land acquisition laws and a practice to compensate acquirees for their loss, the dissatisfaction of acquirees has persisted. The persisting resistance of landowners compels deeper insight into the process of compulsory purchase and the compensation mechanism to understand underlying causes for resistance. The purpose of this paper is to investigate the extent of involvement of these different stakeholders, at various stages in the compulsory purchase process, using stakeholder interaction analysis. Results obtained from this research will be helpful in identifying the gaps in the process of compulsory purchase of land for public projects in Australia.

Design/methodology/approach

A survey of ten different stakeholder groups has been conducted to inquire the level of interaction of different stakeholders at various stages of compulsory purchase process. A comparative study was then performed to identify the gaps between the advocated process (suggested in the literature) and the process adopted by stakeholders.

Findings

The results illustrate that: affected landowners seek involvement at the initial stage when the project plan is under preparation and compulsory purchase declaration are not finalised; objectors (from the public) seek opportunities to convey, to the public agency, their views even though the accountability of public agencies towards this stakeholder is nil; and strong interactions are established during negotiation over the compensation amount thus signifying the urge of acquirer and acquirees to avoid monetary losses and time delays.

Originality/value

This research will be useful in identification of pain points in the compulsory purchase process for public projects. This shall help in evolution of fairer mechanism of land acquisition.

Details

Property Management, vol. 36 no. 1
Type: Research Article
ISSN: 0263-7472

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Book part
Publication date: 19 September 2014

Olivier Bertrand, Marie-Ann Betschinger and Yulia Petrina

This paper investigates the relationship between divestiture activity and subsequent acquisition deal-making. We argue that the divestiture activity of firms influences…

Abstract

This paper investigates the relationship between divestiture activity and subsequent acquisition deal-making. We argue that the divestiture activity of firms influences their acquisition behavior through corporate restructuring learning effects and enhanced strategic flexibility. These organizational spillovers affect not only the degree of risk acquirers are ready to take but also their ability to effectively negotiate with the target firm. We test the existence of organizational spillovers for an international sample of 4,795 acquirers for the period 1990–2008 and get support for our theoretical predictions.

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Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78350-970-6

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Article
Publication date: 1 April 1997

Anthony F. Buono

Presents a case study of an intervention in a technology‐based acquisition. Conceptualizing the technology transfer process as the integrated movement of people…

Abstract

Presents a case study of an intervention in a technology‐based acquisition. Conceptualizing the technology transfer process as the integrated movement of people, capabilities and knowledge, the analysis examines the development and implementation of the acquisition plan. The discussion focuses on the acquiring company’s integration strategy and the ramifications for intervening in such strategic endeavours.

Details

Management Decision, vol. 35 no. 3
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 18 January 2013

Angelo Riviezzo

The purpose of this paper is to investigate the role of specific variables, that are strategic orientations, organizational model and prior acquisitions experience, in the…

Abstract

Purpose

The purpose of this paper is to investigate the role of specific variables, that are strategic orientations, organizational model and prior acquisitions experience, in the management of acquisitions that are not motivated exclusively by financial objectives.

Design/methodology/approach

Multiple cases have been developed, selecting frequent acquirers and analysing the dynamics of acquisitions implementation. Within‐case analysis was aimed at describing the acquisition and integration processes experienced by the selected firms, identifying the role of the researched variables in each phase and their impact on the acquisition outcomes. Thereafter, cross‐case analysis was used to look for the presence of similarities across multiple cases. The organizational characteristics under investigation are proposed as hallmarks of the effective acquirer in knowledge‐intensive industries.

Findings

Characteristics such as the market orientation, the entrepreneurial orientation, the organizational model, the experience in acquisitions management and the investments in knowledge codification emerged from the cases as critical in managing acquisitions that are mainly motivated by the need of the acquirer to have access to knowledge‐based resources of the target.

Research limitations/implications

The paper gives a contribution to the debate going on in literature about the role of new variables in explaining the acquisitions success or failure and the non‐financial motives for acquisitions. It tries to bring the expertise showed by certain firms in managing acquisitions in knowledge‐based industries to specific and, until now, under‐researched features that characterize them. The main limitation of the study is the generalizability of the developed framework, due to the bounded number and the nature of case studies. All the examined firms operate in the field of IT services and all the considered acquisitions are horizontal.

Originality/value

Even if literature has long emphasized the need to prioritize the multiple aspects of the acquisition process and discussed the role of multiple variables in explaining the variance in acquisitions outcomes, empirical research has not completely identified the antecedents of the acquisitions performance and has traditionally overlooked the non‐financial motives for acquisitions. This study focuses on high‐tech industries, where acquisitions are motivated mainly by motives other than financial, and investigates the role of specific and under‐researched characteristics of the acquirer firms.

Details

Management Research Review, vol. 36 no. 2
Type: Research Article
ISSN: 2040-8269

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