The role of emotions during mergers and acquisitions: A review of the past and a glimpse into the future

Abstract

Research on emotions during different phases of the merger and acquisition (M&A) process (i.e., pre-M&A, during M&A and post-M&A) has increased exponentially over the past three decades. However, few attempts have been made to integrate the findings. By systematically reviewing research on emotions during M&As published over the past 30 years, this paper aims to contribute to filling this gap. We organized our findings using a process framework, addressing emotional triggers, the nature of emotions and their dynamics, effects and management. Our review reveals several oversights in research on emotions during M&As, such as the emotional dynamics between the different M&A phases and the role of positive emotions. To address these oversights, future research is encouraged to (a) study emotions following a process-oriented perspective on M&As and include the (interrelationships between) different M&A phases, (b) address the emergence of emotional heterogeneity and homogeneity among organizational members during these phases, (c) investigate the widespread effects of positive emotions and take into account various levels of emotion and (d) explore how emotions can be successfully managed. The paper concludes with a discussion of how these research directions can advance research on emotions during the M&A process.

Emotional dynamics during post-acquisition integration

“…In general, it is assumed that negative emotions adversely affect the realisation of M&A goals. In contrast, positive emotions positively affect the realisation of M&A goals, e.g., realising synergies and low turnover (Graebner et al, 2017;Klok et al, 2022).…”

“…Emotions are triggered explicitly among the acquiring firm's top management (TMT) as they are the only ones aware of a coming M&A. A major emotional trigger during this stage is perceptions concerning organisational identity (Klok et al, 2022). When the M&A is friendly, and the target firm is perceived as a high-status partner, the TMT develops feelings of happiness, resulting in motivation to proceed with the acquisition.…”

“…In this phase, emotions emerge as the buying firm notifies the target firm of its intention to acquire the company. During this phase, a major emotional trigger involves perceptions around organisational identity (Klok et al, 2022). If acquiring or targeting firm members perceive an alignment of their organisational identities, they experience relief and happiness, resulting in cooperative behaviours and attitudes.…”

“…Indeed, research found that emotional dynamics (Graebner et al, 2017) are critical determinants of employee attitudes and behaviours in M&As and, therefore, post-M&A integration performance (Sinkovics et al, 2011). However, while extensive research has been conducted on post-M&A integration (Greabner, 2017;Kroon et al, 2022;Steigenberger, 2017), there remains limited knowledge about the specific role of emotional dynamics during this phase (Klok et al, 2022;Zahoor et al, 2022).…”

“…Firstly, there is an increasing awareness that emotions are crucial during M&As, especially during the post-acquisition integration phase. In this phase, emotions play a decisive role; the acquisition is communicated, and emotions gain weight and momentum as they spread throughout the entire organisation and start to affect the behaviours and attitudes of employees, resulting in M&A cooperation or resistance (Klok et al, 2022). Moreover, emotional dynamics and their effects become more challenging to control due to their serendipitous and unpredictable nature, instigated by employee variances in sensemaking practices (Graebner, 2004).…”