Abstract
Orientation: Mergers and Acquisitions (M&As) are a frequent, alternative strategic growth option to organic growth for organisations. The failure rate of mergers and acquisitions is alarmingly high (70% plus failures). The people factor is seen as one of the main contributors to this failure. Research purpose: To develop and validate a comprehensive, holistic model for the people integration process during mergers and acquisitions. Motivation for the study: The literature on a comprehensive, holistic people integration process for mergers and acquisitions is sparse and fragmented. Research design, approach and method: A qualitative approach was adopted consisting of a three step process which solicited the views of seasoned M&A Practioners; these views were compared against the available literature. Finally, practioners were asked to critique the final model from a practice perspective. The utility of the final model was assessed against two mergers and acquisitions case studies. Main findings: A comprehensive, holistic people integration process model for mergers and acquisitions was developed and validated. However, this model will only significantly enhance mergers and acquisitions value realisation if it is applied from the appropriate vantage point. Practical/managerial implications: The proposed approach will increase the probability of a successful M&A people-wise and M&A value realisation. Contribution/value add: Theoretically , the development and validation of a M&A people process integration model; practically , guidelines for successful people integration; organisationally , significantly enhancing the chances of M&A success; and community wise , the reduction of the negative effects of M&A failure on communities.
Highlights
Key focus of the studyOver the last four decades mergers and acquisitions (M&As) have become an integral part of the strategic initiatives adopted by organisations in order to make their business grow (Galpin & Herndon, 2007; Sherman, 1998; Wickramasinghe & Karunaratne, 2009)
Given the importance of understanding the full compexity and multidimensionality of the M&A process people-wise and in order to set the scene for Model PT, the complete model is given
It is believed that the study adds the following value to the field of M&A’s:
Summary
Key focus of the studyOver the last four decades mergers and acquisitions (M&As) have become an integral part of the strategic initiatives adopted by organisations in order to make their business grow (Galpin & Herndon, 2007; Sherman, 1998; Wickramasinghe & Karunaratne, 2009). The terms mergers and acquisitions are often confused or used interchangeably This distinction in meaning may not make much of a difference due to the fact that the result is often seen as two or more companies with separate ownership, operating under the same roof to achieve shared strategic and/or financial objectives. For the purpose of this study, the terms mergers and acquisitions are used as follows (Schuler & Jackson, 2001; Sherman, 1998; Veldsman, 2002): a merger refers to the situation where two or more free-standing entities of equal standing become a new entity with the original entities disappearing. A Watson Wyatt survey of 1000 organisations found that at most 46% met their cost reduction goals, less than 33% attained their profit goals after the M&A and 64% of the time the M&A did not realise the expected benefits (Boglarsky, 2005)
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