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Article
Publication date: 16 August 2022

Anne-Sophie Thelisson

When talking about mergers and acquisitions (M&As), few announcements clearly define if the operation will deal with a merger (where firms have an equal-to-equal relation…

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Abstract

Purpose

When talking about mergers and acquisitions (M&As), few announcements clearly define if the operation will deal with a merger (where firms have an equal-to-equal relation) or acquisition (when one firm is in control of the operation and decides the integration process). Operations are commonly labeled M&A. Nevertheless, mergers remain rare, and the authors see that most of the time, operations designed and integrated with firms as equals end in the control of one of the entities over the other.

Design/methodology/approach

The authors investigate how two CEOs and their managers communicate during the due diligence period of a merger. The author describes the project merger of two French companies using longitudinal data.

Findings

This in-depth case study provides new insights into the due diligence period and the differences between M&As. The findings highlight how the decision to add an associate from a rival firm to the board ended the merger project as the situation evolved toward an acquisition in CEOs’ minds.

Research limitations/implications

The limitations are those concerning a single case study.

Practical implications

The paper highlights the complexity of merger negotiations and the unexpected events faced by stakeholders. The analysis, thus, contributes to an inclusive and integrative view of the challenges in the due diligence process, whereas first defining the operation as a merger or an acquisition is a first step in identifying the degree to which autonomy and interdependence will be given across firms, and how some strategic decisions will be implemented. This case study highlights two specific items that can be understood by managers as key elements in deal success: defining operations as a merger or an acquisition help internal and external stakeholders in planning the operation; leaving space for adjustment among partners engaged in negotiations during the due diligence period is also useful.

Social implications

Despite their frequency, merger and acquisition failures remain surprisingly high. This paper explores how stakeholders deal with merger negotiations.

Originality/value

The case provides insights into the due diligence period and the way minor events can impact the planned integration. Theoretical concepts and empirical findings from the literature are combined to present a single consistent picture. To the best of the authors’ knowledge, few studies address insights on strategic decisions made as the negotiation period remains a secret and sensitive stage, especially for a failed deal, but we were able to delve beneath the surface.

Details

Journal of Business Strategy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0275-6668

Keywords

Article
Publication date: 1 April 2004

Christine T.W. Huang and Brian H. Kleiner

Posits most mergers and acquisitions deals still face many challenges. States several studies show that cultural incompatibility is always rated as the biggest barrier…

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Abstract

Posits most mergers and acquisitions deals still face many challenges. States several studies show that cultural incompatibility is always rated as the biggest barrier against integration being a success, and gives examples of this. Acknowledges that surveys have shown employees are apprehensive if integration is slow‐paced and gives guidelines for post merger/acquisition management. Concludes that the integration process is key to making acquisitions work.

Details

Management Research News, vol. 27 no. 4/5
Type: Research Article
ISSN: 0140-9174

Keywords

Book part
Publication date: 14 November 2014

Iftekhar Hasan, Jarl G. Kallberg, Crocker H. Liu and Xian Sun

We empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can…

Abstract

We empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can obtain higher short- and long-term returns. We analyze a sample of 1,538 friendly acquisitions partitioned in two separate dimensions: acquisitions of public versus private firms, and acquisitions of a firm’s assets versus acquisitions of a firm’s assets and its management. Using a sample of (nondiversifying) real estate transactions with a public REIT as the acquirer, we find that acquisitions of public firms have insignificant short-term abnormal returns. Acquisitions of private targets have positive and significant short-term abnormal returns. The acquirer’s abnormal returns are higher in both cases when the transactions involve acquisition of the target firm’s management. We find parallel results when analyzing the acquirer’s Q over the merger year and the three following years. Our conclusions are robust to the type of financing (cash, stock, or a combination) used in the acquisition.

Details

Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

Keywords

Book part
Publication date: 26 August 2014

Daniel Rottig, Taco H. Reus and Shlomo Y. Tarba

This chapter aims to make sense of the growing research that examines the role of culture in mergers and acquisitions. We provide a detailed review of the many related but…

Abstract

This chapter aims to make sense of the growing research that examines the role of culture in mergers and acquisitions. We provide a detailed review of the many related but distinct constructs that have been introduced to the literature. While each construct has contributed to our understanding of the role of culture, the lack of connections made among constructs has limited the consolidation of contributions. The review shows what these constructs mean for mergers and acquisitions, what major findings have been discovered, and, most importantly, how constructs interrelate. Our discussion provides several opportunities to foster the needed consolidation of this research.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78190-836-5

Keywords

Book part
Publication date: 1 January 2012

Olimpia Meglio and Annette Risberg

In this chapter, we want to draw merger and acquisition scholars' attention to the variety of settings investigated under the generic label “M&As”. We seek to answer the…

Abstract

In this chapter, we want to draw merger and acquisition scholars' attention to the variety of settings investigated under the generic label “M&As”. We seek to answer the following question: “What are the study objects that mergers and acquisitions scholars actually investigate and refer to with the generic label ‘M&As’?” We will achieve this aim by conducting a detailed analysis of existing empirical research published in management journals. Through our analysis, we wish to contribute to the existing literature by examining the complexity and ambiguity behind the label “M&As”, and exploring the variety of research settings where management scholars have, thus far, used it to measure merger and acquisition performance. By doing so, we will raise scholars' awareness of the importance of defining the scope conditions where the merger and acquisition performance construct does or does not apply.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78052-196-1

Book part
Publication date: 25 August 2014

Tarek Kandil and Dababrata Chowdhury

The purpose of this chapter is to reflect the impact of mergers and acquisitions processes on performance of Islamic banking industry in the United Kingdom through studying within.

Abstract

Purpose

The purpose of this chapter is to reflect the impact of mergers and acquisitions processes on performance of Islamic banking industry in the United Kingdom through studying within.

Design/Methodology/Approach

The present research uses explanatory approach in order to examine the research problems, methodology used in the research is quantitative methods through calculating the long-term share prices performance of the UK Islamic banks’ sample. First, the researchers use the control Islamic bank in the event-time approach. The researchers calculate annual abnormal returns using the buy-and-hold abnormal return (BHAR) method over a period of five years, counting from the quarter of a year when the transaction is said to be effective.

Research Findings

The research findings found that there are significant differences in the Islamic mergers and acquisitions post-long-run performance of the UK Islamic banks to the control the crises that face the United Kingdom from 2007 to 2010. However, the acquiring Islamic bank in high-tech industries had a negative effect on their long-term performance.

Limitations/Implications

The present research has been applied for the Islamic banking industry in the United Kingdom after the Western Europe industry from 2007 to 2010.

Practical Implication

The main implementations of the present research is valuing UK banks carried out the Islamic mergers and acquisitions of a broad range of management disciplines encompassing the financial, strategic, behavioral, operational, and cross-cultural aspects of this challenging and high-risk activity.

Originality/Value

The Islamic mergers and acquisitions have placed a significant amount of value added on the motivation of large banks for engaging in banking mergers and acquisitions’ transactions.

Details

The Developing Role of Islamic Banking and Finance: From Local to Global Perspectives
Type: Book
ISBN: 978-1-78350-817-4

Keywords

Book part
Publication date: 22 November 2016

Svetlana Saksonova and Irēna Kantāne

This study aims to research examples of mergers and acquisitions of European and Latvian dairy firms, the motivation for these transactions and their results, and to show…

Abstract

This study aims to research examples of mergers and acquisitions of European and Latvian dairy firms, the motivation for these transactions and their results, and to show that mergers and acquisitions had a positive impact on the development of the dairy industry overall and on specific firms by increasing their competitiveness.

The authors analyze the reasons for, as well as the meaning and impact of, mergers and acquisitions on firm development, focusing on the example of dairy companies in Europe, and subsequently on these processes in Latvian dairy industry.

The study is based on the qualitative and quantitative analysis of firm financial reports as well as reports of the International Dairy Federation, publications of the United Nations Food and Agriculture Organization, annual reports of the International Farm Comparison Network, reports on the dairy industry in the European Union, Latvian Central Union of Dairy Producers, Lursoft firm registry data, as well as reports of the Ministry of Agriculture, and Latvian Farm Consultation and Education center.

The study relies on statistical comparisons of firm operations before mergers or acquisitions as well as during the process and afterwards. This allows identifying the impact of mergers itself on particular firms or the industry, while abstracting from exogenous factors. Mergers and acquisitions in Latvian dairy industry had begun in 2011 and continued until 2013. However, the geopolitical situation in Europe in 2015 had fully offset the positive impact of this process. The deterioration in the geopolitical climate due to developments in Russian–Ukrainian relations has had a big impact on the economic processes affecting the development strategy of dairy firms.

This study finds that often the problems of firm development are related to the lack of financial management especially deficiencies in decision making about firm mergers and acquisitions.

Historical and statistical analysis as well as comparisons of successful experiences in Europe and Latvia allows the authors to conclude that in evaluating decisions on the possibilities for mergers and acquisitions Latvian firms have to be guided by the most important results of this process: possible increases in foreign direct investment and the growth in market share. This will, in turn, give the firms an opportunity to acquire new technologies, reorganize manufacturing processes, and start producing goods with larger value added. Ultimately, this will allow increasing firm values.

Details

Contemporary Issues in Finance: Current Challenges from Across Europe
Type: Book
ISBN: 978-1-78635-907-0

Keywords

Book part
Publication date: 26 August 2014

Nicola Mirc

The contribution revisits existing research on human impacts on the performance of mergers and acquisitions. Findings are grouped into three categories: individual-…

Abstract

The contribution revisits existing research on human impacts on the performance of mergers and acquisitions. Findings are grouped into three categories: individual-, organizational- and managerial-related factors. Results show that while research seems various and abounding, influential factors are often studied as static setting approached in isolation, without measuring their direct relation to post-acquisition outcomes.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78190-836-5

Keywords

Abstract

Details

Evaluating Companies for Mergers and Acquisitions
Type: Book
ISBN: 978-1-78350-622-4

Book part
Publication date: 4 September 2007

Satu Teerikangas

Different forms of inter-organisational encounters, including joint ventures, alliances, mergers and acquisitions, have over the last decades become fashionable and

Abstract

Different forms of inter-organisational encounters, including joint ventures, alliances, mergers and acquisitions, have over the last decades become fashionable and much-sought means of globalisation. A continuous concern shared by managers involved in these different forms of inter-organisational encounters is the challenge of making them work in practice – their successful implementation and management. The cultural dimensions of these different kinds of inter-organisational encounters, particularly in cross-border contexts, have been deplored as being particularly difficult. This paper builds on prior research and aims to understand how the cultural dimensions of inter-organisational encounters have been approached by researchers on mergers and acquisitions on the one hand and researchers on alliances and joint ventures on the other hand. Based on a comparative literature review, the findings suggest that the two fields, despite their valuable contributions and the similarities in the phenomena they study, have remained surprisingly isolated from one another and would offer opportunities for cross-fertilisation. Through its theoretical contribution, the paper intends to offer insights to researchers in both streams of research.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-0-7623-1381-5

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