Looking into the ‘black box’ – unlocking the effect of integration on acquisition performance

Abstract

Extending research on the performance of Mergers and Acquisitions (M&As), this paper seeks to explain how the post-acquisition integration phase affects acquisition performance. Despite extensive research efforts, there remains a scant understanding of how acquisition implementation, particularly in the post-acquisition integration phase, impacts the performance of M&As. Based on an extensive study of eight acquisitions, in this paper, a grounded model detailing the mechanisms by which the post-acquisition integration phase affects acquisition performance is developed. The model posits that integration-related factors do not bear directly upon acquisition performance. Instead, their effect is mediated by functional organizations in both firms. When focusing into these functional mediating dynamics, we observe that integration-related processual, behavioural and cultural factors affect the identified functional mediators in different ways. Going forward, we echo calls for integrated perspectives to the study of M&A and M&A performance in particular.

When degree of integration mediates level of acquired ownership and post-acquisition innovation performance: evidence from cross-border technological acquisitions

“…Such that "there [can] be no doubt that the relationship between the recombinations of resource stock and their performance are mediated by the integration process that is dependent on the integrative capability of the acquiring firm" (Larsson, 1992). Surveybased studies demonstrated that the integration of two firms in the acquisition performs a mediating function between various factors and acquisition performance (Teerikangas and Thanos, 2018). For instance, Chen et al (2018) proved that various similar and complementary recombinations between target and acquiring firms' resource stock influence PAIP of the acquiring firm by the channel of SI.…”

Exploring and extending the synergy concept – a study of three acquisitions

“…Synergy has been discussed from a variety of perspectives. These perspectives include creating value (Larsson and Finkelstein, 1999;Haspeslagh and Jemison, 1991), strength and increased profitability (Kanter, 1989), sharing competencies and capabilities (Bresman et al, 1999;Goold and Campbell, 1998), managing purchasing synergy (Rozemeijer, 2000), the strength of market-related performance over cost savings (Homburg and Bucerius, 2005), acquisition outcome measured through different types of performance or effects on other stakeholders (Haleblian et al, 2009;Teerikangas and Thanos, 2018), integration process related to long-term firm performance (Zollo and Meier, 2008;Gates and Véry, 2003), synergy potential as an effect of the duration of the integration period (Oh and Johnston, 2020), the level of target autonomy and synergy potential (Zaheer et al, 2013), manager effects on acquisition performance (Teerikangas et al, 2011;Graebner, 2004) and serendipitous value creation (Graebner, 2004;Colman and Lunnan, 2011). Research on performance has almost solely addressed the organisational units involved in the integration following an acquisition or a merger.…”

“…Intended synergy is more commonly described than achieved synergy because synergy is not only difficult to attain (Zaheer et al, 2013;Goold and Campbell, 1998;Porter, 1987) but also to identify and measure (Garzella and Fiorentino, 2014;Zaheer et al, 2013;Goold and Campbell, 2000). In the literature, the realisation of synergy appears complicated and not easily achieved (Garzella and Fiorentino, 2014;Zaheer et al, 2013;Zollo and Meier, 2008) often due to integration problems (Teerikangas and Thanos, 2018;Cartwright et al, 2012;Mirc, 2012), differences in organisational culture (Stahl and Voigt, 2008) or difficulties in presenting positive financial performance (King et al, 2004). Being an important measure of the expected outcome of acquisitions (Larsson and Finkelstein, 1999), there seems to be a difference between intentions and realisations (Zollo and Meier, 2008), which makes acquisition planning important (Epstein, 2005).…”

Towards a process model of emotional sensemaking in post-merger integration: linking cognitive and affective dimensions

“…Building on recent calls to develop a more comprehensive perspective of PMI (Gomes et al, 2013;Teerikangas and Thanos, 2018), this paper proposes an approach that combines the affective and cognitive dimensions of PMI which are hardly conceptualised as interconnected so far. Accordingly, this paper answers the following question: How do affective and cognitive dimensions jointly shape the processes and outcomes of sociocultural PMI?…”