Post-merger Integration Process Research Articles

Speeds of post-merger integration: The roles of chronos and kairos in M&As

Mergers and acquisitions (M&A) are major events in organizational development and the post-merger phase is widely recognised as being crucial for value creation. One of the most important decisions in this process is the speed of integration. However, despite a growing body of literature on this subject, conclusions remain a source of persistent equivocality. In fact, this debate has been dominated by diametrically opposed, and often highly normative, views advocating either fast or slow post-merger integration (PMI). One commonality within this discussion though, is the shared assumption that integration proceeds at a linear, constant rate, whatever the speed. We challenge this assumption.We undertook a 30-month, longitudinal study of two merging, not-for-profit, organisations. Using detailed and multiple sources of process data, we were able to identify and track periods of comparatively rapid and equally comparatively slower integration during the two-and-a-half- year PMI process. We thus offer a novel empirical demonstration of the changes in speed during the PMI process. We support this with a theoretical discussion using the temporal concepts of chronos and kairos. We analyse the determinants and mechanisms of changes in speed, asking why and how these variations occur. We call this mechanism the kairotic switch and discuss its theoretical and managerial uses and implications.

How does decision-making involvement affect perceptions of speed during post-merger integration?

This article offers an empirical demonstration of how different employees perceive the speed of change during the post-merger integration (PMI) process. As such, it adds to the growing body of literature on the speed of integration in the aftermath of a merger or acquisition (M&A). It broadens our understanding of the M&A integration process as it goes beyond binary recommendations of ‘fast’ or ‘slow’ integration by highlighting the relationship between an employee's involvement in the decision-making process and their perception of the speed of change.We conducted a multi-level longitudinal study over a two-and-a-half-year period. Our qualitative research on two not-for-profit, higher education institutions, employed multiple sources of process data. Building from this, our article thus provides not only novel theoretical insights into the PMI process, but equally offers valuable managerial advice on how staff morale, turnover and change resistance might be more efficiently managed during PMI.

How Do Emerging Market Multinational Enterprises Build a Global Ecosystem: A Post-merger Integration

How do emerging market multinational enterprises (EMNEs) build global ecosystems through cross-border mergers and acquisitions? This research conducts case studies on Haier Group's post-merger integration processes of 4 overseas companies. This paper proposes a three-dimension theoretical framework to understand global ecosystem development: ecosystem structure, ecosystem stage, ecosystem element. This paper finds that, unlike the linear structure of global supply chains and value chains, the global ecosystem has a non-linear, multi-agent structure composed of value chains and resource pools. In the process of building a global ecosystem, a dynamic three-stage process of influence, integration, and evolution emerges. At different stages, the focal firm of the ecosystem has shown heterogeneous focus in terms of ecosystem vision, ecosystem system and ecosystem capability. The research findings integrate business ecosystem theory and cross-border M&A theory, which have practical implications for EMNEs to go global and establish a global ecosystem.

Unpacking the dynamics in acquisition of capabilities: the role of identities during postmerger integration

PurposeDespite best intentions, mergers and acquisitions often do not live up to the expectations for performance. This study examined how the salience of multiple identities creates dynamics in postmerger integration processes and how these dynamics influence the acquisition of the target's capabilities.Design/methodology/approachThe authors conducted an in-depth case study of a large American consumer goods multinational corporation's acquisition of a family-owned German beauty business and examined responses to decisions and events during the postmerger integration process.FindingsThe results show how and why efforts to acquire unique target capabilities might not deliver the hoped-for results. The authors discovered multiple identities that became salient during the postmerger integration process which subsequently influenced interpretations and reactions to decisions and events and which created intergroup dynamics. The authors also noted the role of language in making these identities salient. Such dynamics pose challenges to managing the postmerger integration process and to acquiring sought after capabilities.Originality/valueThis study reveals how different identities become salient in the interpretation of particular events and decisions, resulting in emotional and behavioral reactions and intergroup dynamics. Furthermore, it uncovers the role of language in making identities salient. This study offers further insight into identity dynamics when the capability of the target firm is the motive of the acquisition.

Foreign Divestment during Postmerger Integration: Antecedents of MNE Foreign Divestment

This study extends research on foreign divestment by considering it within the broader context of corporate restructuring, exploring how MNE M&As affect divestment of foreign affiliates. Drawing from agency and organizational theories, I claim that the postmerger integration process reduces managerial and organizational barriers to foreign divestment and thereby increases the likelihood of foreign divestment. I confirm this prediction using data from a sample of foreign affiliates in Korea during 2006–2019. The positive relationship between MNE M&As and foreign divestment is stronger for majority-owned foreign affiliates, for which managers have made more commitments and therefore are generally less likely to make a withdrawal decision. In contrast, the relationship is weaker when a focal affiliate is the parent MNE’s sole affiliate in a host country.

M&A successes: Breadth, depth, and deal completion time in the US semiconductor industry

Most previous studies examining M&As (mergers and acquisitions) have focused on the post-merger integration process. While there have been studies that have partially investigated the importance of deal completion, we argue that firms could learn to increase their deal completions by leveraging their experience from prior successful acquisitions and that their cumulative success could reduce the deal completion time; that is, the time from the announcement of the deal to its resolution. To address this unexplored issue about M&As, we investigated whether prior intra- and/or inter-industry acquisition experiences helped accelerate subsequent focal acquisitions in the semiconductor industry, which is characterized by rapid technological innovation. We tested our hypotheses on data consisting of 323 acquisition deals in the US semiconductor industry between 2000 and 2013. The results showed that both prior intra- and inter-industry acquisition experiences significantly reduced deal completion time. JEL CLASSIFICATION M10

If you say so: A mixed-method study of hospital mergers and quality of care.

Despite a lack of supporting evidence, hospitals continue to merge in pursuit of quality improvements. We seek to develop a more thorough understanding of the quality effects of hospital mergers by integrating various theoretical perspectives using a mixed-methods design. Quantitatively, we tested the quality effect of all consummated hospital mergers in the Netherlands between 2008 and 2014 on 15 quality indicators (with 82 measurements at hospital, department, and disease levels) using a difference-in-difference approach with Bonferroni correction. Qualitatively, we conducted three comparative case studies to examine how hospital executives, managers, and medical professionals perceive the quality impact of hospital mergers. Our quantitative results reveal few significant effects of hospital mergers on quality of care at all levels. After applying Bonferroni correction, two quality indicators are negatively associated with hospital mergers. However, the qualitative results indicate that hospital staff have positive perceptions of the mergers' quality implications, resulting from scale and shock effects. The perceptions of hospital staff regarding mergers diametrically oppose their measurable effects. However, the operationalization of quality by hospital staff members differs considerably from the way it is quantitatively measured. The positive perceptions of hospital staff toward mergers could further contribute to the institutionalization of mergers as a quality improvement strategy. Hospital managers seeking measurable quality improvements should be wary of merging, despite potential positive perceptions toward it within the organization. In case they do decide to merge, mitigating difficulties in the postmerger integration processes seem most pertinent to achieve measurable effects.

M&A Post-merger integration – istota i rola dobrze przygotowanego przejęcia

Ponad połowa fuzji i przejęć kończy się zniszczeniem wartości (value destruction) dla akcjonariuszy. W długim okresie – ponad 5 lat – tylko niektóre fuzjei przejęcia wnoszą wartość dodaną dla obu stron transakcji. Integracja – spółki przejmowanej do aktywów nabywcy po połączeniu – jest jednym z problemów związanych z tworzeniem wartości (value creation) w transakcjach fuzji i przejęć. Większość członków kierownictwa zaangażowanych w proces M&A koncentruje się na procesie badania spółki (due dilligience) lub aspektach proceduralnych „zakupu”. Przygotowanie odpowiedniego planu integracji dla firmy często jest elementem odkładanym na później, a jest on jednym z kluczowych elementów procesu przejęcia. Należy podkreślić, że istnieje szereg kluczowych aspektów, które należy wziąć pod uwagę – od ustalenia celów i wskaźników efektywności dla kadry kierowniczej po zrozumienie „ekosystemu”, w którym działa firma i jej interesariuszy. Komunikacja jest także jednym z wiodących problemów w integracji po fuzji i przejęciach. W ostatnich latach pojawiła się nowa koncepcja tymczasowych menedżerów (interim manager). Osoba odpowiedzialna za projekt integracji bywa nazywana menedżerem integracji (post-M&A manager). Osoba taka może zostać oddelegowana zarówno na stanowisko członka zarządu ds. finansowych jak i operacyjnych czy handlowych. Celem niniejszego artykułu jest wyjaśnienie znaczenia procesu integracji po połączeniu, a także przybliżenie roli menedżera integracji.

Can Post-Merger Integration Costs and Synergy Delays Explain Leverage Dynamics of Mergers?

The integration of two merging firms takes time to complete, and synergy gains from a merger can be captured only after the firms go through a costly and often lengthy post-merger integration period. This paper presents a dynamic model of capital structure for the target firm and the acquirer to examine the effects of the integration period on acquiring firms’ financing behavior around mergers. The model generates predictions that provide rational (non-behavioral) explanations for documented empirical evidence regarding leverage dynamics around mergers. When anticipating a longer and costlier integration period, acquiring firms strategically plan ahead by choosing a lower leverage prior to and at the time of the merger, and gradually lever up as the post-merger integration process nears completion. Deals with longer integration periods are financed with a larger fraction of equity. The model also implies that acquiring firms optimally time takeovers of underleveraged firms that experience negative shocks to their earnings.

Empirical research on mergers’ leverage dynamics and post-merger integration duration

PurposeThe purpose of this paper is to examine the effects of the post-merger integration duration on acquiring firms’ leverage behavior before and after a merger, using a dynamic model in which full merger benefits cannot be consumed at the instant of a merger, but rather after a pre-specified post-merger integration period.Design/methodology/approachThis paper presents a dynamic model and empirical tests that describe the impact of the post-merger integration period on the capital structure dynamics of the acquiring and target firms prior to a merger and during the post-merger integration period. By incorporating costs associated with the post-merger integration period, the model can provide new implications for the leverage behavior around the merger.FindingsEmpirical tests support the model implications by showing that the longer the expected post-merger integration process, the less likely the acquirer will structure the financing of the combined firm in a manner that increases firm leverage. Since integration takes time to complete, an acquirer tends to retain financial flexibility during the integration process by assuming lower levels of debt when determining the capital structure of the merged entity.Originality/valueThe model generates new implications related to acquiring firms’ leverage dynamics along with the method of payment choice. The analysis of the duration of the post-merger integration period extends both the theoretical and empirical literature that tacitly assumes that the merger-related synergy is realized immediately at the merger date. This is the first model in the literature that assumes that both the acquiring and the target firms can change their capital structure overtime, which allows us to analyze both the financing structure and the merger timing. Previous empirical studies also ignore the integration period in the analysis of the method of payment choice and leverage behavior around mergers. The model in this paper can be extended along a number of dimensions.

A paradoxical approach symbiotic to postmerger integration: a French longitudinal case study

PurposeThis paper aims to examine post-merger integration (PMI) through the lens of paradox to determine how paradoxes contribute to successful integration. Although PMI has been identified as crucial to understand merger success or failure, the literature on PMI drivers remains inconclusive.Design/methodology/approachDrawing on the theory of paradox and two key elements of PMI, strategic interdependency (SI) and organizational autonomy (OA), the authors describe the merger of two listed French companies using longitudinal data.FindingsThe authors identify how the paradox between OA and SI was triggered and fostered PMI success by leading to symbiotic integration. They also show that two capabilities were central in helping the paradox to evolve: preserving the specificities of the organizations and pooling their respective capabilities. These capabilities result from basic decisions and actions during the integration implementation, such as highlighting the expertise of the target firm, refocusing the core activity while valorizing each company’s expertise, clarifying the identity of the new organization on the market and enhancing joint piloting and transferring both general management capacity and functional abilities during the reorganization period.Practical implicationsThe authors offer several useful insights for managers trying to manage paradoxical tension throughout the merger process. This study encourages managers to embrace inconsistencies as they make decisions and to shift to dynamic decision-making as a way to adapt to complex contexts.Originality/valueThis study adopts a global and inclusive approach to focus on OA and SI and flesh out a picture of the integration process. It proposes a dynamic process model to conceptualize the stage-wise nature of the PMI process by highlighting the interrelations between OA and SI dynamics.

Supervisor-Employee Relation Is Not Enough For Positive Employee Perception Of Merger Integration

In this study, we examine how supervisor-employee social relationship in the advice-seeking and giving network influences employee’s perception of the post-merger integration (PMI) process. Using leader-member exchange and social network theory perspectives, we also investigate the moderating roles of a supervisor’s positions in the informal network structure (supervisor advice network centrality, supervisor advice network brokerage) and supervisor’s communication and energizing abilities on this influence. We argue that supervisor-employee informal connection in the advice-seeking and giving network positively affects employee perception of the post-merger integration process; and this positive influence is conditional on whether the supervisor i) occupies a central or ii) brokerage position in the informal network structure; iii) can effectively communicate with his or her employees; and iv) can generate energizing relationships with his or her connections. We present corroborating evidence for these four moderating factors through a sample of supervisor-employee pairs who are current employees of a new merged professional services firm.

Mind your language!: role of language in strategic partnerships and post-merger integration

PurposeThis paper aims to identify the role of language in international business context, especially in a post-merger integration (PMI) process, and to develop a framework for language strategies in a PMI context.Design/methodology/approachBased on the authors’ review and building on earlier works, this paper develops a conceptual model regarding the use of language in different PMI scenarios and identifies the key resource mix that may be suited for an effective deployment of language strategies.FindingsThe authors find that the use of a language at target firms depends on the degrees of strategic interdependence and organizational autonomy. They classify different constellations of targets in a PMI context and propose the most appropriate language strategies for different classification of PMI firms.Research limitations/implicationsThe authors develop five testable future research propositions based on our conceptual model. The paper is not without its limitations. The authors’ propositions need to be tested in future studies. It may be sometimes difficult to collect data based on all the four segments of firms using a quantitative design. It is also challenging to investigate about the language used at the target firms using quantitative designs.Practical implicationsThe authors’ model has several practical implications for the managers. Bidder firm’s managers can decide the use of appropriate language depending on their acquisition strategy. It is very likely that target managers have to change the language following the acquisition, and because of this change, influence on their routines will be significant. This issue becomes most important if both firms do not speak the common corporate language – English language. The authors bring ideas for a best fit, which are applicable not just for merger and acquisition but also for other strategic sourcing areas such as outsourcing strategies.Social implicationsThere are several negative emotions that are invoked through language. Language is also power laden and affects social structure and group dynamics at work. By addressing the use of appropriate language strategies, people can potentially avoid the dark side of language.Originality/valueThe authors present testable propositions for future research in a PMI context.

Crafting Values in Organizational Change Processes

This paper explores employees’ use of organizational values in the context of a post-merger integration (PMI) change process, which entails adopting a new set of values. Within such a dynamic corporate context, organizational values may assist employees in proactively managing their work performance and job satisfaction by putting organizational values into practice and using them (‘crafting’) in the context of work. A four-week diary study was conducted in which 71 employees participated. Diary records and validated questionnaire data were collected during a post-merger integration process in a multi-national corporation, and were then analyzed using multi-level modelling. This study suggests that using and practicing organizational values can affect people's motivation to act proactively in changing work settings. We discuss the implications of our findings for future work in helping organizational members craft their work by drawing on organizational values for sustainable collaboration.

How do institutional logics evolve over the merger process? A case in the public–private urban planning sector

Facilitating the postmerger integration process between organizations requires that they combine opposite institutional logics through the creation of a new authority, identity, and legitimacy. We underline that the implementation of strategic change during the merger process was fostered by the ability of the actors to combine institutional logics through three concrete practices: redefining the authority, identity, and legitimacy of the new organization. Managerial recommendations from the institutional logics perspective are provided to facilitate the postmerger integration process.

The Role of Occupational Identification During Post-Merger Integration.

Integration processes after mergers are fraught with difficulties, and constitute a main cause of merger failure. This study focuses on the human aspect of post-merger integration, and in particular, on the role of occupational identification. We theorize and empirically demonstrate by means of a survey design that employees’ identification with their occupation is positively related to their willingness to cooperate in the post-merger integration process, over and above the effect of organization members’ organizational identification. This positive effect of occupational identification is stronger for uniformed personnel but attenuates in the course of the integration process. Qualitative interviews further explore and interpret the results from our statistical analysis. Together, these findings have important practical implications and suggest future research directions.

How Can Experience Influence Cross-Border M&A Performance?

For years, international deals between developed countries dominated the deal market because governments of many emerging countries had long imposed restrictions and barriers to inward and outward capital flows, limits on capacity extension, stringent licensing requirements to enter new businesses, et cetera, which inhibited the rise of deals between developed and emerging economies as a result of poor or absent growth avenues. In addition, until recently, technological innovation, transportation, and communication that advanced at astonishing rates only in the last decades did not allow easy, fast, and cheap combination, integration, and communication between business firms located in geographically and culturally distant countries. The few deals involving developed and emerging economies were also initiated almost exclusively by developedmarket buyers that acquired either minority or majority stakes in emerging-market targets. There has recently been a steady transition in a number of emerging economies as local governments tried to liberalize their closed economies. This has not only spurred both deals originated by developed-market acquirers, largely through joint ventures and minority stake purchases, but also deals of developed-market firms by emerging-market companies. Liberalizations help firms to go abroad but are not sufficient to overcome cultural differences. Numerous studies on cross-border deals show evidence of a negative implication of cultural distance (Bjorkman et al., 2007; Cartwright & Schoenberg, 2006; Schweiger & Goulet, 2000; Teerikangas & Very, 2006). Cultural distance, cultural incompatibility, cultural misfit are viewed as a potential obstacle to exploiting synergistic benefits in post-merger integration process (Barkema et al., 1996). On the other side, other studies show that cultural distance provides new routines and repertoires that can increase their performance in new markets (Chakrabarti et al. 2009; Morosini, et al. 1998). Can cross-border deal experience moderate the cultural distance? We consider the possibility that crossborder deal experience can affect the success of the deal and the subsequent benefit from culturally differences. By relying on event study methodology, we analyzed the stock market reaction of a sample of Italian firms in response to announcements of MA particularly, experience and cultural distance.

HR practices, context and knowledge transfer in M&A

This paper presents a theoretical framework of the role of HR practices in overcoming the differences and conflicts between the source and recipient of knowledge during the exploitation of synergies in the post-merger integration (PMI) process. The presented analysis of an international case study explores the crucial yet neglected relationship in M&A between the context and process variables in the PMI stage. The results of the analysis suggest a model that includes the unique characteristics of and relationship between source and recipient, knowledge integration mechanisms and the role of HR practices during the knowledge transfer process. Directions for future research are finally suggested.

Development and Training at Mergers and Acquisitions

The importance of development and training during post-merger integration process are neglected. In this paper, the role of the individual in corporate culture clash situations, during post-merger integration, is presented. The effects of culture clash in mergers and acquisitions (M&A) on acquired management attitudes and behavior are discussed. It is proposed that these effects influence post-merger turnover and integration success. Therefore, development and training during post-merger integration, to deal with the effects of culture clash situations in M&A, are pivotal for success. The implications of these ideas for research and practice are discussed.

"Successful M&A experiences: Breadth, depth, and deal duration in the US semiconductor industry"

The majority of previous studies regarding M&As have focused on the Post-Merger Integration process. However, these past studies have neglected the importance of deal completion. Based on the organ...