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Article
Publication date: 11 September 2007

Kristin Ficery, Tom Herd and Bill Pursche

The purpose of this article is to understand synergies in merger and acquisition (M&A) transactions.

Abstract

Purpose

The purpose of this article is to understand synergies in merger and acquisition (M&A) transactions.

Design/methodology/approach

Provides excerpts from the forthcoming book Synergies: The Art and Science of Making 2+2=5 by Bill Pursche.

Findings

The six most common mistakes that acquiring executives make are: defining synergies too narrowly or broadly; missing the window of opportunity; incorrect or insufficient use of incentives; not having the right people involved in synergy capture; mismatch between culture and systems; and using the wrong process.

Original/value

This paper is a new approach to capturing the value of synergies in M&A, aimed at executives throughout the M&A process.

Details

Journal of Business Strategy, vol. 28 no. 5
Type: Research Article
ISSN: 0275-6668

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Article
Publication date: 6 April 2021

Johan Holtström and Helén Anderson

This study aims to contribute with an extended framework on synergy realisation in acquisitions. The study conceptualises synergy realisation after acquisitions, in…

Abstract

Purpose

This study aims to contribute with an extended framework on synergy realisation in acquisitions. The study conceptualises synergy realisation after acquisitions, in interaction with other companies in a business network and that synergy can be the result of both intended and not intended actions.

Design/methodology/approach

The study is based on a company involved in acquisitions, being both the acquirer and the acquired. The data for analysis were collected through semi-structured interviews with managers involved in the described acquisition processes. The semi-structured interviews were guided by overarching themes to cover relevant areas of the described acquisitions.

Findings

This study develops a framework in which synergy is used as a concept in business networks. The framework offers a more dynamic perspective on acquisition processes and extends the view of acquisition performance beyond more financial and company internal aspects of acquisition processes. Further, the findings show that related companies such as customers and suppliers, play important roles in synergy realisation.

Practical implications

From a managerial perspective, the study shows the importance of understanding the underlying forces of integration processes.

Originality/value

The concept of synergy used in this study not only includes the companies integrated in an acquisition but also their business networks. Including the integrated companies and their business networks provides a more dynamic perspective from which to plan and realise synergy.

Details

Journal of Business & Industrial Marketing, vol. 36 no. 13
Type: Research Article
ISSN: 0885-8624

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Book part
Publication date: 29 December 2016

Guanxiong Huang and Hairong Li

As an extension to Assael’s (2011) review on media synergy, this chapter examines the latest evolvement of media synergy research in the past 10 years by integrating…

Abstract

Purpose

As an extension to Assael’s (2011) review on media synergy, this chapter examines the latest evolvement of media synergy research in the past 10 years by integrating studies from a wide range of leading journals.

Methodology/approach

We searched a total of 17 major journals in advertising, communication, and marketing from 2005 to 2014 and identified a total of 42 articles on media synergy. These studies were reviewed to assess the current status of media synergy research.

Findings

Studies of inter-media interaction at the individual level provide mixed support for a media synergistic effect, and the occurrence of this effect demands certain boundary conditions. Research on multi-media engagement has been gaining momentum in the past few years and is a promising subject in media synergy research.

Research implications

We envision two growing approaches in future media synergy research: the neuroscientific approach and the data mining approach.

Originality/value

This chapter posits that media synergy research has evolved in the most recent years to a new phase, which is multi-media engagement. Hence, this chapter extends Assael’s work in terms of explicating media synergy in the context of social media engagement and identifying research gaps in current literature.

Details

Advertising in New Formats and Media
Type: Book
ISBN: 978-1-78560-312-9

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Book part
Publication date: 26 August 2014

Kamal Ghosh Ray and Sangita Ghosh Ray

Cross-border mergers and acquisitions are now the fundamental mechanisms of globalization and considered as prime vehicles for business engagement across the countries…

Abstract

Cross-border mergers and acquisitions are now the fundamental mechanisms of globalization and considered as prime vehicles for business engagement across the countries through the foreign direct investment route. Significant amounts of foreign funds are crossing the country borders for acquisitions with the objectives of earning super normal returns. But realizing super normal returns from foreign acquisitions are far more difficult than that of foreign greenfield projects or domestic M&As or greenfield projects. The super normal profit itself is “synergy” which is the main driving force for any M&A including the cross-border one. Even though foreign policies of individual countries affect cross-border M&A decisions, corporate and market-driven financial numbers significantly influence the synergy estimation. Synergy should bring in all round greater efficiency and value addition to all stakeholders. But if the cross-border deal is not financially crafted properly, it may fall flat causing more distress to the acquirer compared to domestic acquisition. The theory of synergy is well developed which mostly applies to the domestic M&As. But due to inherent differences between cross-border and domestic M&As, the same synergy theory may not apply equally to the cross-border ones. Therefore, a different connotation of synergy is propounded in this work for cross-border M&As, which can be a corollary to the conventional theory of synergy. This alternative theory of synergy aims at helping the companies in developing their own financial strategies before making their strategic decisions for cross-border M&A deals.

Details

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

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Book part
Publication date: 14 November 2017

Hue Chi Dao and Bruce C. Martin

We contribute to the growing literature examining how social enterprises might best accommodate their hybrid structure when pursuing dual goals of social improvement and…

Abstract

We contribute to the growing literature examining how social enterprises might best accommodate their hybrid structure when pursuing dual goals of social improvement and economic sustainability. Drawing on extant literature, the case is made for why synergy between the social and commercial business models that hybrid social enterprises employ should positively impact effectiveness in delivering organization outcomes. We then develop a method for comparing the synergy between the social and commercial business models employed within and across organizations, and test the method using a sample of seven social enterprises operating in different social fields. Results demonstrate that our method can be applied consistently across a range of social enterprise types and that variation in degree of synergy is considerable with overlap rates ranging from 9% to 77%. Using learning from this exploratory study, we develop propositions describing how and why social entrepreneurs develop business model synergy, the relationship between business model synergy and organizational performance, and suggest future research to test these propositions. Implications for theory development and practice are discussed.

Details

Hybrid Ventures
Type: Book
ISBN: 978-1-78743-078-5

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Article
Publication date: 4 September 2020

Andrejs čirjevskis

This paper aims to operationalize and to test the ARCTIC (A – Advantage, R – Relatedness, C – Complexity of Competence, T – Time of Integration, I – Implementation Plan, C…

Abstract

Purpose

This paper aims to operationalize and to test the ARCTIC (A – Advantage, R – Relatedness, C – Complexity of Competence, T – Time of Integration, I – Implementation Plan, C – Cultural Fit) framework to assess the prerequisites of competence-based synergy in the acquisition process. The current research provides new analyses of recent acquisitions in the global beauty industry where the ARCTIC framework was satisfied and where the ARCTIC model was NOT satisfied by decisive factors to get the acquisition's synergies. It allows readers to contrast two case studies and grasp how the framework works in greater detail.

Design/methodology/approach

The current research relies on an extensive archival search that included financial statements, annual reports, internal documents, industry publications and CEO statements to get at a micro-level understanding. This boosts research data and the operationalization of the ARCTIC framework.

Findings

The research identified four steps for investigating whether core competence transfer in an acquisition process would be a source of competence-based synergies. The incorporation of real options into the synergy valuation measures market value-added arising from M&A deals.

Originality/value

The current paper contributes to theoretical and practical issues of global M&As as part of the existing literature of international business and strategic management. The impact on reciprocal synergies of agency problems, external interaction between CEOs in M&A deals, corporate governance systems and an executive compensation theory are promising areas of future research.

Objetivo

El presente artículo pretende poner en práctica y a prueba el esquema ARCTIC a fin de evaluar los requisitos previos de la sinergia basada en las competencias en el proceso de adquisición. Este estudio ofrece nuevos análisis de las recientes adquisiciones acontecidas en el sector de la belleza a nivel mundial en las que se siguió el esquema ARCTIC y en las que NO se siguió por factores decisivos para conseguir las sinergias de la adquisición. Permite a los lectores contrastar dos casos prácticos y comprender con mayor detalle cómo funciona el esquema.

Diseño/metodología/enfoque del estudio

Para el estudio actual se ha llevado a cabo una amplia búsqueda de archivos entre los que se incluyen balances financieros, informes anuales, documentación interna, publicaciones del sector y declaraciones del director general para obtener una comprensión pormenorizada. De este modo, se potencian los datos de la investigación y la puesta en práctica del esquema ARCTIC.

Conclusiones

En el estudio se han identificado cuatro pasos que determinan si la transferencia de competencias básicas en un proceso de adquisición sería el origen de sinergias basadas en las competencias. La incorporación de opciones reales en la evaluación de las sinergias mide el valor añadido del mercado derivado de las operaciones de fusión y adquisición.

Originalidad/valor

Este artículo contribuye a los aspectos teóricos y prácticos de las fusiones y las adquisiciones mundiales como parte de la bibliografía existente sobre comercio internacional y gestión estratégica. El impacto de las sinergias recíprocas de problemas del agente-principal, las interacciones externas entre directores generales en acuerdos de fusiones y adquisiciones, los sistemas de gobernanza empresarial y una teoría de la compensación ejecutiva son campos prometedores para futuras investigaciones.

Details

Academia Revista Latinoamericana de Administración, vol. 34 no. 1
Type: Research Article
ISSN: 1012-8255

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Article
Publication date: 19 July 2021

Manel Antelo, David Peón and Xosé-Manuel Martínez-Filgueira

The purpose of this paper is to analyse a key research hypothesis: Do firms ruled by managers have a greater rationale to implement a mergers and acquisitions (M&A) than…

Abstract

Purpose

The purpose of this paper is to analyse a key research hypothesis: Do firms ruled by managers have a greater rationale to implement a mergers and acquisitions (M&A) than (family) firms managed by their owners?

Design/methodology/approach

This paper uses an organizational-delegation-quantity oligopoly game to examine the profitability of M&As for firms that strategically delegate production decisions to managers versus family firms with no strategic delegation. This paper delimits the condition for delegation as aimed at increasing merger profitability: non-family CEOs will implement mergers more frequently than family CEOs and more so for inefficient firms because these require fewer synergies. The paper tests the main propositions with data on all M&As by small and medium firms in Spain in 2017 and 2018.

Findings

The greater the average operating margin of a firm, the more likely a merger, which is also more likely between non-family firms. The evidence of higher ex post synergies by firms is not statistically significant due to large variability, suggesting that some family firms did not obtain the expected ex ante synergies. The lesson is that family firms competing in an environment of high marginal costs (e.g. industries in the early stage of the life cycle) seeking to grow through inorganic means such as M&As have an incentive to professionalize management.

Research limitations/implications

This paper models competition in a Cournot fashion, representative of industries where firms compete in terms of sales growth and increased market share. Other results might hold in industries where firms are oriented to price competition or to service differentiation. The empirical research uses proxies for key variables such as the form of firm governance and unit costs, while hypotheses on ex ante synergies driving merger decisions had to be tested through ex post synergies.

Originality/value

M&As by small firms and family firms remain largely unexplored in the literature. This paper contributes with both a theoretical model and empirical research that highlight the implications of strategic delegation contracts for M&A deals.

Details

Management Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 16 November 2012

Robert Fraunhoffer and Dirk Schiereck

A substantial minority of bidding firms disclose synergy forecasts during mergers and acquisitions (M&A). Using these hand‐collected synergy announcements, the purpose of…

Abstract

Purpose

A substantial minority of bidding firms disclose synergy forecasts during mergers and acquisitions (M&A). Using these hand‐collected synergy announcements, the purpose of this paper is to investigate synergy characteristics as well as explore their shareholder wealth effects within the European energy sector between 1998 and 2010.

Design/methodology/approach

The authors employ the market model event study methodology to infer short‐term wealth implications as well as the Fama French 3 Factor model to estimate long‐term effects.

Findings

The paper provides evidence for a positive correlation between the synergy size and combined bidder and target returns. However, the market discounts disclosed synergies to a degree which reveals that managers in the energy sector are likely to overestimate the actual, realizable size of the emerging synergies. Additionally, the results show that post merger long‐term returns of synergy disclosing firms remain significantly positive, indicating that projected synergies are continuously realized.

Originality/value

As the first study the paper shows that a synergy disclosure effect exists within the European market and hence demonstrates that synergy forecasts serve as an efficient instrument to decrease existing information asymmetries.

Details

International Journal of Energy Sector Management, vol. 6 no. 4
Type: Research Article
ISSN: 1750-6220

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Article
Publication date: 11 September 2017

Xuebing Dong, Yaping Chang and Xiaojun Fan

Marketers recognize that the internet is crucial in the lives of consumers; thus, they invest money on online advertisements. Using multiple online media primarily…

Abstract

Purpose

Marketers recognize that the internet is crucial in the lives of consumers; thus, they invest money on online advertisements. Using multiple online media primarily influences the message acceptance of consumers. The synergistic effect of online multimedia relies on form, content, and sources of information, and time. The paper aims to discuss these issues.

Design/methodology/approach

A model that reflects the influence of the characteristics of online multimedia on message response through message acceptance is established based on theories of information persuasion, encoding variability, and multiple-source assumption. Based on a survey of 411 online media users, the study applies partial least-squares regression to test the research model.

Findings

The results show that variety of forms, complementary of contents, diversity of sources, and time interval influence message response via message strength. Complementary of contents and diversity of sources affect message response via perceived credibility. Synergy type moderates the relationship between variety of forms and perceived credibility and between diversity of sources and perceived credibility.

Research limitations/implications

The current study mainly tests the effect of these characteristics on message response and the moderating effect of synergy type. Future research can examine the effect of these characteristics on information seeking and consumption behavior and the moderating effect of the cognitive mode of consumers.

Practical implications

This study provides insight into the characteristics of synergy and contributes to the literature on integrated marketing communication. The results provide guidance for practitioners to effectively plan online multimedia practices.

Originality/value

This study explored the influence of the characteristics of online media synergy on message response through message acceptance. The study also discussed the moderating effect of the type of online multimedia synergy.

Details

Online Information Review, vol. 41 no. 5
Type: Research Article
ISSN: 1468-4527

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Article
Publication date: 1 August 2004

Philip R. Harris

This paper explains the concept of cultural synergy and provides a contrast of societies that could be characterized as having high or low synergy, as well as…

Abstract

This paper explains the concept of cultural synergy and provides a contrast of societies that could be characterized as having high or low synergy, as well as organizational culture that reflects high and low synergy. Within organizations, the research insights reported here center on behaviors and practices that contribute to synergy and success among teams, particularly in terms of international projects. The concluding section describes people who are truly “professionals” in their attitude toward their career and work, and how they can mutually benefit from the practice of synergy. Real European leaders actively create a better future through synergistic efforts with fellow professionals. The knowledge work culture favors cooperation, alliances, and partnership, not excessive individualist actions and competition. This trend is evident, as well as necessary, in corporations and industries, in government and academic institutions, in non‐profit agencies and unions, in trade and professional associations of all types. In an information or knowledge society, collaboration in sharing ideas and insights is the key to survival, problem solving, and growth. But high synergy behavior must be cultivated in personnel, so we need to use research findings, such as those outlined in this paper, to facilitate teamwork and ensure professional synergy. In addition to fostering such learning in our formal education and training systems, we also should take advantage of the increasing capabilities offered to us for both personal and electronic networking. Contemporary global leaders, then, seek to be effective bridge builders between the cultural realities or worlds of both past and future. Cultivating a synergistic mind‐set accelerates this process.

Details

European Business Review, vol. 16 no. 4
Type: Research Article
ISSN: 0955-534X

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