Strategic Factors Underlying Acquisition Performance in a Post-communist Economy: Experience from Slovenia

Abstract

This article examines the performance of acquisitions in Slovenia in the period of transition between communist rule and the advent of the market economy. The proposition is that, once the motives of an acquisition are identified, the success or failure of a particular acquisition can be measured by examining the extent to which those motives have been achieved. The actual realisation of some motives for acquisitions, such as to transfer skills and share activities, is strongly tied to the ROE and value added per employee in the acquired company in the post-acquisition period. On the other hand, realisation of financial synergies has not resulted in higher ROE or value added per employee. Based on our research into 45 acquisitions in Slovenia, we pinpointed some key success factors that determined the performance of the acquired firm. From the point of view of a local firm that was sold, the key question was how the acquirer would ensure the company's long-term development.