Based on the McKinsey 7S Framework, this study was undertaken to assess the effect of Style on post-Merger and Acquisition (M&A) performance of commercial banks in Kenya. The independent variable of the study is Style, operationalized through change communication, post-M&A change management, and post-M&A leadership. Post-M&A integration, the moderating variable, is measured by the degree and rate of integration. This study is anchored on the Three-step change, Resource Based View, and Universalistic Best Practice theories. The Kenyan commercial banking sector has 38 registered commercial banks currently operating in the industry; 29 of which have undergone M&A activities. A sample of 10 banks, involved in M&A activities for a period ranging from six months to five years, was selected. This timeframe recommended by Masoud et al., (2020) is critical for M&As as it allows the assessment of both short-term and medium-term integration outcomes, where initial challenges are addressed and operational synergies start manifesting. Data was collected using both primary and secondary sources. Primary data, analyzed through content and framework analyses provided qualitative insights into integration practices. Secondary data, primarily consisting of financial ratios of bank performance (Return on Assets, Return on Equity, Return on Investment, Operating Profit Margin, and Net Profit Margin) was analyzed using the Independent Sample T-test in SPSS version 28.0. Correlation analysis and inferential statistics were employed to measure the strength of relationships between study variables. The study employed a 95% confidence level with a 5% level of precision, ensuring that the results were robust and could be generalized with minimal error. These levels of precision and confidence enhance the reliability and quality of the research by reducing the likelihood of making incorrect inferences about the broader population. The findings reveal that effective change communication post-M&A significantly enhances employee engagement and reduces resistance, which in turn positively influences overall organizational performance. Change management practices that are structured and inclusive of employee feedback contribute to smoother integration processes, minimizing disruptions to operations and customer service. Leadership style was found to be a critical factor in the success of M&As, with collaborative and change leadership resulting to better post-M&A outcomes. The results further confirmed that the conceptual framework accurately predicted post-M&A performance, with Style having a positive, statistically significant effect. Additionally, post-M&A integration was found to moderate the relationship between Style and post-M&A performance, amplifying the positive outcomes when the integration was well-executed. The study concludes that the style of managing change, communication, and leadership post-M&A is critical in determining the success of commercial banks in Kenya, with a strong emphasis on transparent communication, structured change processes, and adaptive leadership styles. These findings suggest that adopting best practices in these areas can significantly enhance post-M&A performance. To enhance post-M&A performance of commercial banks, this study recommends integration of operations and systems, implementation of robust performance measurement systems, effective communication, leadership, and change management. There is need for future studies on the effects of M&A activities on the risk profile of commercial banks. This could involve examining how changes in the size, diversification, and complexity of the institution following M&A impact its risk exposure and resilience to external shocks.
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Jan 15, 2024
Anas Khatori + 1
Open Access