Reasons for Frequent Failure in Mergers and Acquisitions: A Comprehensive Analysis

ISBN-13: 9783835008441 / Niemiecki / Miękka / 2007 / 227 str.

Thomas Straub; Prof Dr Dr Jos Jarillo

Opis

This is an important book. The topic is important, and Dr. Straub approaches it with a new approach. In fact, one could say that the book s importance stems from its lack of disciplinary focus, relying instead on a holistic understanding of the phenomenon. Too often, academic research is pursued within a narrowly defined academic field, necessarily blinding researchers to realities whose essence is inter-disciplinary. This is typically the case with research on Mergers & Acquisitions, making most of the findings relatively unimportant for practice. Yet M&A are a crucial part of business development. It is evident that companies long-term success is at least partially dependent on their strategic actions. And these are often shaped in practice by merger and acquisition activity. Thus phenomena as varied as globalization, value-chain optimization, or product diversification are often implemented as M&A operations. In no few cases, M&A activity constitutes the company s strategy. If, as noted above, strategic moves do have an impact on lo- term success, it follows that M&A activities are at the core of many business successes and failures. As such, they play an important role in the development of the whole society: wealth is created (or destroyed) mostly by companies. Perhaps the most remarkable aspect of the phenomenon is its very high failure rate."

Spis treści

Reasons for M&A Failure - a Comprehensive Model
Strategic Management
Market similarities, Market Complementarities, Operational Similarities, Operational Complementarities, Market Power, and Purchasing Power
Organizational Behavior
Acquisition Experience, Relative Size, Cultural Compatibility
Financial / Price Perspective
Acquisition Premium, Bidding Process, and Due Diligence
Quantitative Research
Partial least squares (PLS)
Comprehensive Model using Structural Equation Modelling
Comprehensive Performance Measure

O autorze

Dr. Thomas Straub ist Professor für Unternehmensführung und Organisation am Fachbereich Wirtschaft und Verwaltung der Fachhochschule Bern

Blurb

Despite the goal of performance improvement, results from mergers and acquisitions (M&A) are often disappointing. Numerous empirical studies show high failure rates of M&A deals. Studies are mostly focused on individual determinants. The literature therefore lacks a more comprehensive framework that includes different perspectives.

Using four statistical methods, Thomas Straub shows that M&A performance is a multi-dimensional function. For a successful deal, the following key success factors should be taken into account:
• Strategic logic which is reflected by six determinants: market similarities, market complementarities, operational similarities, operational complementarities, market power, and purchasing power.
• Organizational integration which is reflected by three determinants: acquisition experience, relative size, cultural compatibility.
• Financial / price perspective which is reflected by three determinants: acquisition premium, bidding process, and due diligence.
All 12 variables are presumed to affect performance either positively or negatively. Post-M&A performance is measured by synergy realization, relative performance (compared to competition), and absolute performance.