Post-acquisition Integration Research Articles

EXPRESS: How Do National Cultural Differences Affect Cross-Border Acquisitions? Cultural Dimensions, Learning from Supply Chain Partners, and Post-Acquisition Performance

This research examines how national cultural differences between the acquirer and target firms affect post-acquisition performance in cross-border acquisitions. We focus on two dimensions of national culture—individualism/collectivism (IDV) and power distance (PDI)—for their close relevance to structural changes that occur during post-acquisition integration. We find that while differences in PDI are negatively associated with post-acquisition performance, differences in IDV positively affect such performance. We also find that the acquirer’s cultural learning from supply chain partners helps mitigate the negative impact of PDI differences on post-acquisition performance, especially when the partner has a similar national culture in PDI to the target. Our theoretical development and empirical findings contribute to the operations and supply chain management research by illuminating the differential effects of national cultural differences on post-integration outcomes. Also, our study sheds new light on the possibility that working with supply chain partners may provide an opportunity for cultural learning that can be utilized in a post-acquisition integration setting.

A Learning Journey: Unveiling the Dynamics of Post-Acquisition Integration Experiences

A Learning Journey: Unveiling the Dynamics of Post-Acquisition Integration Experiences

The Impact of CEO Retention on Post-Merger Integration: Insights from Chegg in the Ed-Tech Industry

This study examines the crucial role of chief executive officers (CEOs) in post-acquisition integration, focusing on Chegg, a prominent ed-tech company in a rapidly evolving industry. Analyzing CEO actions post-acquisition through interviews and metrics, we find that a three-year CEO retention period significantly contributes to successful integration at Chegg. This research emphasizes the importance of understanding ideal CEO retention and their strategic actions, offering insights for more successful post-acquisition integration and long-term economic benefits.

Talent management through speed with dexterity: the postacquisition integration strategy of Celgene by Bristol Myers Squibb

PurposeSkillful management of employees after a merger or acquisition (M&A) is one of the key aspects to ensuring a successful deal, and most notably to ensure talent retention. This paper aims to describe how Bristol Myer Squibb (BMS) efficiently integrated Celgene after it bought the company for a near-record $74bn in 2019. The authors explain the structural elements applied during the premerger phase (acquisition experience, partner location and portfolio alignment) and the subsequent postmerger decisions to ensure rapid integration (choice of the leadership team, cultural integration and the communication strategy).Design/methodology/approachThis paper adopts a single-case approach of the second largest acquisition in the pharmaceutical industry. It analyzes the management and talent retention decisions taken to ensure rapid integration of Celgene while ensuring that employees felt engaged in the process. This was achieved despite the consideration challenges posed by the COVID-19 global lockdown.FindingsM&As are well known for the HR challenges they generate such as change management, cultural clashes and increased employee turnover. This paper demonstrates how BMS was able to overcome these hurdles, combining a fast speed of integration with managerial dexterity.Originality/valueThis paper offers a concise and clear outline of the management strategies used by BMS to ensure a successful integration strategy. This approach included a strong respect for the human as well as financial and strategic aspects of the deal. For even greater clarity, this paper offers a diagrammatic representation of the strategy of BMS to improve the speed of integration.

Autonomy as a Strategic Dial: A Dynamic Framework for Managing Acquired Subsidiaries

Managing acquired subsidiaries can be daunting. Parent and affiliate executives strive to co-create value, but fixed mindsets around subsidiary autonomy can result in diverging interests and outcomes. Through a longitudinal study of Audi’s post-acquisition integration of supercar manufacturer Lamborghini, this article provides guidance on how to manage the level of acquired subsidiary autonomy as a strategic dial that can be dynamically adjusted over time for mutual benefit. This dynamic approach to autonomy rests on three specific managerial levers—appraisal respect, organizational identity, and resource orchestration. These can enable the renewal of competitive capabilities and sustain post-acquisition success.

From distrust to trust: Balancing between forcing and fostering management control systems in a hostile cross-border post-acquisition integration

Extant research contends that in a context characterised by distrust, partners do not engage in developing trust in each other, and the use of management control systems creates tensions and increases distrust. This begs the questions of whether and how trust can be promoted and management control exercised in such a context. Thus, this paper examines the interplay between management control systems and (dis)trust in a hostile post-acquisition integration of two global companies. In doing so, this paper provides a detailed analysis of the role of management control systems as well as the underlying motives and the consequences of their use in various integration processes at different organisation levels. Applying the labour–management negotiation strategy theory, this study distinguishes between two modes of implementing management control. First, in the forcing mode, management control systems are used to coerce and monitor employees and instil top-down organisational values in them to promote controllability. Second, in the fostering mode, management control systems are exercised to promote mutual benefits, learning and shared values to support cooperation. The results show that the combined use of forcing and fostering management control systems supports the development of trust in the post-acquisition context characterised by distrust. Forcing control promotes trust by providing stability, creating accountability for cooperative achievements and supporting conflict resolution, whereas fostering control develops trust by facilitating goal sharing, mutual learning and value integration. This study advances the knowledge of management control systems and the relation between (dis)trust and control in the post-acquisition integration context by demonstrating why and how managers balance between forcing and fostering controls and how these control modes, separately and in combination, interact with (dis)trust.

Operating synergy and post-acquisition integration in corporate acquisitions: A resource reconfiguration perspective

We theorize that contingent on whether acquisitions put more emphasis on realizing cost versus revenue synergy, they require different degrees of post-acquisition integration due to their different resource reconfiguration requirements. We use data from 448 US-based acquirers and 1452 domestic acquisitions to find strong support for our theoretical conjecture. On the one hand, we find that for acquisitions that emphasize cost synergy more than revenue synergy, the degree of integration exerts a linear mediating effect on acquirer performance. That is, performance increases as the degree of integration increases. On the other hand, we find that for acquisitions that emphasize revenue synergy more than cost synergy, the degree of integration exerts an inverted U-shaped mediating effect. That is, performance is highest at intermediate degrees of integration. We advance research on post-acquisition integration by first demonstrating the importance of aligning the degree of integration with the synergy rationale in acquisitions (emphasis on cost or revenue synergy) to achieve high acquisition performance. Second, we introduce a novel, replicable approach for empirically operationalizing the degree of post-acquisition integration. We contribute to the resource reconfiguration lens of dynamic capabilities by showing that firms whose managers align the intended source of value creation with their approach to reconfiguration may achieve higher performance outcomes.

To integrate or not? Understanding knowledge integration of target firm

PurposeTechnology acquisition is a common phenomenon of acquiring external knowledge, but we have a limited understanding of conditions in which the acquirer integrates the target or not. On one hand, the acquirer may have a policy to integrate the target to benefit from its prior knowledge. On the other hand, the target may face challenges in continuing its knowledge creation and the acquirer may want to provide it autonomy to not disrupt it. This paper aims to identify conditions in which targets tend to be less integrated after acquisitions, allowing them to maintain more autonomy and contribute more to knowledge creation.Design/methodology/approachWe test our arguments in the empirical setting of the global biopharmaceutical industry using a difference-in-difference approach on a longitudinal dataset of matched patents. We examine self-cites received by patents belonging to acquirers and the targets before and after the acquisitions.FindingsWe find that, on average, the targets’ prior patents do not receive more self-cites after the acquisition. We conclude that this is because their R&D activities are disrupted, suggesting a higher level of post-acquisition integration. However, more nuanced findings reveal that it may not be the case all the time. When the target has more research experience, is international or is specialized in complementary technologies, prior patents of targets continue to receive more self-cites after the acquisition. It indicates that the targets in such conditions continue knowledge creation, suggesting a lower level of post-acquisition integration.Originality/valueOur findings contribute to post-acquisition integration research. While post-acquisition integration downside is common, we present conditions in which such a downside may be less likely. We highlight that the context of an acquisition may be an important determinant of the extent of integration of the target. Moreover, we supplement the integration research (cultural, structural and human resource and leadership perspectives of integration) by adding a knowledge-based perspective to it. Such dynamics have important implications for acquirers and targets in deriving value from the acquisition.

Acquisition as a mode for servitisation: servitisation integration and consequences

PurposeWhile existing literature extensively explores manufacturing firms expanding into services, little is known about the modes of servitisation, the means by which they carry it out. This paper concentrates on acquisitions as a mode of servitisation. Post-acquisition integration is when the potential of an acquisition is realised. The paper therefore aims to categorise types of integrations following the acquisition of servitised firms and discusses their consequences for servitisation.Design/methodology/approachThe empirical part of the paper is based on two case studies, each involving the acquisition of servitised firms. Both acquirers changed their integration approach over time.FindingsThe paper conceptualises three types of integrations: rhetorical, insulated and transformative integrations, indicating whether and how the acquirer becomes servitised following the integration. These highlight the analysis of integration based on business models and customer orientation in relation to servitisation.Originality/valueThis paper contributes to research on servitisation by emphasising acquisitions as a mode of servitisation and conceptualising three integration types related to business models and customer orientations. Furthermore, the paper highlights how an acquirer's servitisation leads to new offerings targeting new customers, as opposed to strengthening existing relationships.

Cultural Heterogeneity of Top Management Teams, Cross-Border Acquisitions, and Financial Performance of Chinese Publicly Listed Companies

ABSTRACT Using data from Chinese publicly listed companies (PLCs) over the 2010–2017 period, this paper examines the impact of cultural heterogeneity within the top management team (TMT) on the post-acquisition performance of cross-border acquisitions (CBAs). TMT cultural heterogeneity is measured as the cultural distance between the board chairperson and chief executive officer (CEO), based on the south-rice-north-wheat cultural dichotomy in traditional China in 1916. Overall, we find that TMT cultural heterogeneity can increase the likelihood of CBAs. However, it also has a significantly negative impact on both the market performance and profitability of privately-owned Chinese PLCs after the CBAs. To provide a comprehensive analysis, we also explore the moderating effects of state ownership and high-tech industries. The results reveal that TMT cultural heterogeneity can actually improve the market performance of CBAs conducted by state-owned PLCs, and it can enhance the profitability performance of CBAs within the high-tech industry. Our analysis highlights the significance of TMT cultural heterogeneity during the post-acquisition integration process following CBAs.

Analysis of LVMH Group's Business Operation Model and Marketing Strategy - A Case Study Based on Group Mergers and Acquisitions

This article aims to introduce the situation of LVMH Group and its industry-leading position in the global luxury goods market supply chain. Since its establishment, LVMH Group has expanded its business map through continuous acquisitions and expansion, leveraging its strong capabilities and strategic vision. The focus is on analyzing two acquisition cases carried out by LVMH: the Tiffany & Co. acquisition case and the Dior acquisition case. For these two cases, the background, motives, process, and key steps are introduced, and the effects and impacts of the acquisitions are discussed in depth. At the same time, a detailed analysis of LVMH's acquisition strategy is conducted, including acquisition targets, selection criteria, post-acquisition integration and management, etc. Finally, the research findings are summarized, and future development directions are proposed. Since the gradual control of the pandemic, the luxury goods market has witnessed a recovery in consumption and significant growth in sales. This article has certain reference values for understanding trends in the luxury goods industry, corporate strategies, and market competition.

Legal Issues Arising from Comcasts Acquisition of DreamWorks and Oriental DreamWorks

Comcast Corporations acquisition of DreamWorks Animation SKG Inc. in 2016 presents a case study of the legal complexities involved in the merger and acquisition legal framework in the United States and China. This paper explores the different aspects of this acquisition, including antitrust regulations, cross-border legal issues, minority shareholder rights, intellectual property management, and post-acquisition integration. Antitrust concerns and foreign regulations, such as Chinas Anti-Monopoly Law, play a significant role in this case which highlights the necessity of compliance with regulatory frameworks to avoid penalties and legal disputes. The importance of protecting minority shareholders' rights in an acquisition is demonstrated by the lawsuit filed by AACERS against DreamWorks CEO Jeffrey Katzenberg. The need for transparency, fairness, and fulfilling fiduciary duties is crucial to mitigate the risk of legal conflicts. This paper also includes the transaction of intellectual property assets. Evaluate the post-acquisition integration procedure, including management restructuring, marketing strategy, and layoffs, with a focus on the necessity of dispute resolution and maintaining compliance with the relevant laws and regulations. Overall, the acquisition of DreamWorks Animation shows some valuable insights and experiences of the legal complexities of an acquisition that involves a cross-border company. Companies can accelerate the acquisition process and integrate smoothly after the acquisition by carefully considering these legal complexities before making the deal.

Light Touch Goes Where? A Longitudinal Study of the Post-Acquisition Integration Paths Adopted by Chinese Multinational Enterprises

Light Touch Goes Where? A Longitudinal Study of the Post-Acquisition Integration Paths Adopted by Chinese Multinational Enterprises

Perceptions of Management Control in Post-acquisition Integration Context Through Sense-making: An Interpretive Case Study

The purpose of this qualitative case study was to explore perceptions of a management control system (MCS) in a post-acquisition integration context through sense-making using interpretive case study methodology. The study draws from the theories of the two types of bureaucratic formalization, sense-making in organizations and MCSs. The study material consists of semi-structured interviews with the managers at the corporate, divisional, and business unit levels. At the time of the study, the case company was growing through several acquisitions per year, which created constant challenges with post-acquisition integration and a need for more formal MCS. The article shows how the backgrounds of the acquired business units are related to the perceptions of the MCS. We found that the identity threat and retrospection were properties of sense-making that explained the business unit managers’ attitudes towards the corporate MCS. Particularly prior experiences of production-centred line-manager positions in small entrepreneurial firms seem to foster coercive perceptions of MCS. The results of this study contribute to MCS literature.

Cultivating post-acquisition employee engagement: the Danaher business system

PurposeOne of major concerns of serial acquirers is to ensure value creation. However, mergers and acquisitions (M&As) are well known for the key management problems they generate such as change management, cultural clashes and increased managerial turnover. Despite this, M&As also offer opportunities for integrating best practices. This paper aims to demonstrate how Danaher attempts to cultivate employee engagement in companies it has recently acquired.Design/methodology/approachThis paper adopts a single-case approach to show how Danaher implements its in-house method – the Danaher Business System – a management system during the take over and the postacquisition phase.FindingsThe findings from this paper demonstrate best practice management and strategies needed to ensure successful M&As. Almost 40 years after serial acquisitions, Danaher is cited as one of the most successful serial acquirers. Its human approach to takeovers has been a central part of this.Originality/valueThis paper offers a concise and clear outline of the management strategies used by Danaher to ensure successful acquisitions relying on Kaizen and LEAN with a strong focus on the human side. During the takeover and postacquisition integration, Danaher’s human approach would appear to be a key differentiating element.

Depositor market discipline: New evidence from selling failed banks

This paper studies depositor behavior following the acquisition of failed banks by healthy banks in FDIC-supervised transactions. Using a US bank branch-based dataset spanning 2007 to 2014 we find that failed bank depositors discipline acquiring banks post-resolution. This appears to be related to features of the acquiring banks' asset quality and loan composition, but it may also be linked to irrational desciplinary behavior or post acquisition integration issues. We also find some evidence that depositor market discipline may have an impact on the competitive fetaures of local banking markets post resolution.

Light‐touch integration: A study on cross‐border acquisitions by emerging market multinationals

AbstractResearch SummaryEmerging‐market multinational enterprises (EMNEs) are known for their “light‐touch” integration after cross‐border acquisitions. That is, compared with their developed‐country counterparts, EMNEs are more likely to retain the top management team (TMT) of the target firms. In this paper, we argue that this difference in retention rate can be explained by country, cohort, and firm effects. While the literature mostly associates EMNEs with where they are from (country effect), EMNEs are also new to cross‐border acquisitions (firm effect) and among the first in their peers to venture abroad (cohort effect). Analysis on a sample of 1862 absorption‐type cross‐border acquisitions supports our hypotheses that while the country effect persists, the difference in retention rate narrows significantly as EMNEs and their peers gain more relevant cross‐border acquisition experience.Managerial SummaryThe retention of top management team in target firms is a critical aspect of post‐acquisition integration (PAI). In this study, we examine the reasons behind the curious observation that, compared with acquirers from developed countries, multinational enterprises from emerging markets (EMNEs) are more likely to keep the target firm TMT intact, even in deals where extensive integration is in line with the overall acquisition objectives. Our analyses show that the legitimacy constraints associated with EMNEs' less developed home countries indeed present initial challenges to their integration efforts. However, these differences narrow significantly as EMNEs and their peers accumulate more experience in similar cross‐border acquisitions. This study highlights the dynamic nature of PAI strategies and the large variance among firms beneath the “EMNE” label.

What drives integration teams to achieve high integration process performance in absorption acquisitions? A configurational analysis

Integration process performance, capturing the extent to which integration teams realize their integration milestones, is significant in absorption acquisitions, because it constitutes an important intermediate step towards eventual M&A performance. Still, we know little about the conditions that motivate and enable integration teams to attain the goals of the post-acquisition integration process. Based on goal-setting theory, we suggest that integration process performance in absorption acquisitions depends on the fit among the ambitiousness of the cost and growth goals with which an integration team is tasked, the ampleness of integration team staffing, and the extent to which target firm employees are involved in integration planning. Fuzzy-set Comparative Analyses of 199 integration teams in 23 absorption acquisitions reveal three distinct configurations of these conditions that can engender high integration process performance. The results of this study extend research on post-acquisition integration by offering theory and fine-grained empirical evidence at the task-level of the integration process and provide helpful guidelines for managerial practice in acquisition integration in absorption acquisitions. We further outline the potential of configurational reasoning for the analysis of mergers and acquisitions, as a way to methodologically rejuvenate the field.

Industry consolidation as a strategy: an acquisition program perspective

PurposeThe purpose of this paper is to enlighten the intriguing process of industry asset consolidation. It is critical for firms to manage their business acquisitions strategically for survival in this industry life cycle process, which develops through multiple company mergers. The companies extensively acquiring industry assets have utilized acquisition programs consisting of both pre-acquisition strategizing and post-acquisition integration; however, the existing literature on acquisition programs focuses on post-acquisition integration activities. This study aims to bridge this gap.Design/methodology/approachThis study focuses on pre-acquisition strategizing of acquisition programs and proposes a model in which an acquiring company could manage its acquisitions for industry asset consolidation over the industry evolution.FindingsEmpirically, in the multi-case study of telecommunications infrastructure companies, the authors collect an extensive set of archival records accumulated over the whole industry life-cycle, spanning more than 30 years, and they apply a qualitative data analysis to reveal strategic actions within the companies.Research limitations/implicationsThe discoveries elaborate on activities comprising the acquisition process model: social legitimacy, strategic alignment, resource fulfillment, consolidation pursuit and merging.Practical implicationsThe counterintuitive findings are that the companies strived to ensure legitimacy early in the telecommunication infrastructure markets before they reached strategic alignment with their owners.Originality/valueThe results extend the understanding of industry asset consolidation as an organization-level phenomenon and show how contextual factors connected to industry life-cycle phases, such as regulatory regimes and financial cycles and industry evolution, influence the attributions of an acquisition program.

Acquisitions of divested business units: A typology and strategies for success

Acquisitions are notoriously difficult to execute successfully. Poor implementation of the postacquisition integration process is a major source of acquisition value destruction. To find new solutions for this vexing problem, we leverage the emerging, triadic view of mergers and acquisitions (M&A) activities, which emphasizes the interconnectedness between sellers, acquirers, and the units that are transferred between them. We apply the triadic lens to acquisitions of divested business units, and we find that a unit’s experiences with its seller before and during divestiture can profoundly shape the unit’s needs and expectations, which, in turn, must be addressed by the acquirer in the integration process. We identify four key mechanisms—status, resource accessibility, trust, and self-sufficiency—that underpin the seller’s impact on the divested unit, and we develop a typology—comprising favored, neglected, shocked, and independent units—that animates the ramifications of the seller’s actions. Then, for each type, we discern strategies for its postacquisition integration execution that are tailored to its distinctive needs, which originate from its experiences with the seller. To make these insights practical and readily implementable, we provide a diagnostic checklist for identifying the four types of divested units and offer an action plan of type-specific strategies for successfully managing them in the postacquisition integration process.