Post-merger Integration Research Articles

The impact of ESG distance on mergers and acquisitions

In this study, we utilize the most recent ESG (Environmental, Social, and Governance) data to calculate the ESG distance between acquiring and target firms, subsequently assessing its impact on merger outcomes. Our analysis suggests that deals with a larger ESG distance are associated with reduced cumulative abnormal returns (CARs) around the deal announcements. We find that, following the Kyoto Protocol in 2005, counterparties with larger ESG distances are less favored by investors. This suggests that the market perceives significant ESG distance as a potential impediment to seamless post-merger integration. Notably, a pronounced acquirer-target ESG distance diminishes the propensity for mergers, especially when target firms with more bargaining power during the negotiation. In the long-term performance of acquiring firms, we discern that ESG disparity reduces firm performance and increases crash risk.

Quality of care after a horizontal merger between two large academic hospitals

BackgroundHospital mergers remain common, but their influence on healthcare quality varies. Data on effects of European hospital mergers are ill defined, and academic hospitals in particular. This case study assesses early quality of care changes in two formerly competing Dutch academic hospitals that merged on June 6, 2018. MethodsStatistical process control and interrupted time series analysis were performed. All adult, non-psychiatric patients, admitted between 01-03–2016 and 01-10-2022 were eligible for analysis. Primary outcome measure was all cause in-hospital mortality (or hospice), secondary outcomes were unplanned 30-day readmissions to same hospital, length of stay, and patients’ hospital rating. Data were obtained from electronic health records, and patient experience surveys. FindingsThe mean (SD) age of the 573 813 included patients was 54·3 (18·9) years. The minority was female (277 817, 48·4 %), and most admissions were acute (308 597, 53·8 %). No merger related change in mortality was found in the first 20 months post-merger (limited to the pre-Covid-19 era). For this same period, the 30-day readmission incidence changed to a downward slope post-merger, and the length of stay shortened (immediate level-change −3·796 % (95 % CI, −5·776 % to −1·816 %) and trend-change −0·150 % per month (95 % CI, −0·307 % to 0·007 %)). Patients’ hospital ratings seemed to improve post-merger. InterpretationIn this quality improvement study, a full- and gradual post-merger integration strategy for a Dutch academic hospital merger was not associated with changes in in-hospital mortality, and yielded slight improved results for secondary quality of care outcomes.

The role of digital transformation in post-merger integration: Evidence from the financial services industry

The role of digital transformation in post-merger integration: Evidence from the financial services industry

How do organizations refine their post‐merger integration routines over consecutive acquisitions?

AbstractThe post‐merger integration (PMI) phase of mergers and acquisitions (M&A) can determine M&A success. Little is known about how organizations refine their PMI routines with accumulated M&A experience. This study proposes a process model of PMI‐routine development, where the outcomes of routines enacted in earlier acquisitions shape routines in subsequent acquisitions. We test the model using 312 instances of routine implementation, across five consecutive acquisitions by the same acquiring company, and make two key scholarly contributions. First, we advance prior research by identifying how a routine's level of complexity moderates the association between routine adherence and routine outcomes. Second, we elucidate the effect of learning from failure—uncovering a learning process with performance feedback as input. Specifically, negative routine outcomes at the focal acquisition strengthened the positive effect of the improvisation (low adherence) enacted in the focal acquisition on the subsequent modifications to the codified routine, which are likely to improve its performance in future acquisitions.

“Strings of Tensions Waiting to be Struck”—Towards a Paradox Perspective on Post-Merger Integration

“Strings of Tensions Waiting to be Struck”—Towards a Paradox Perspective on Post-Merger Integration

The Impact of Speed Variations on Individuals’ Emotional Journey During Post-Merger Integration

The Impact of Speed Variations on Individuals’ Emotional Journey During Post-Merger Integration

Evaluating the Effects of Organizational Culture on Post-Merger Integration

Evaluating the Effects of Organizational Culture on Post-Merger Integration

Impact of Past and Current Integration Experiences on Emotional Appraisal in Post-Merger Integration

Impact of Past and Current Integration Experiences on Emotional Appraisal in Post-Merger Integration

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.

The Study of Merger and Acquisitions: Value Creation and Risk Management

This master thesis explores the intricate dynamics of Mergers and Acquisitions (M&A) with a focus on understanding the dual dimensions of value creation and risk management. In the contemporary corporate landscape, M&A activities have emerged as pivotal strategic tools for companies seeking growth, diversification, and competitive advantage. The research aims to provide a comprehensive analysis of how these transactions contribute to shareholder value while effectively navigating associated risks. The literature review establishes the foundation by synthesizing existing knowledge on M&A, spanning historical context, economic impact, financial performance, and corporate governance. Special attention is given to theories and models related to value creation and risk management in M&A, providing a comprehensive overview of the multifaceted nature of these transactions. The research methodology adopts a mixed-methods approach, incorporating both quantitative and qualitative techniques. A carefully selected sample of companies engaged in M&A activities serves as the focal point for data collection. Financial analyses, surveys, and content analysis of relevant documents constitute the primary tools for gathering insights into the chosen topic. Variables related to value creation and risk management are defined and measured using a combination of financial metrics, qualitative assessments, and established measurement scales. The study pays close attention to ethical considerations, ensuring participant privacy and data confidentiality throughout the research process. The anticipated findings aim to shed light on the factors influencing successful value creation in M&A, providing insights into post-merger integration strategies, financial performance, and the broader economic implications of these transactions. Additionally, the research seeks to identify effective risk management practices that contribute to mitigating challenges associated with M&A, including cultural differences, regulatory compliance, and integration hurdles. By presenting a rigorous and well-justified research methodology, this thesis seeks to contribute to the existing body of knowledge on M&A, providing valuable insights for practitioners, policymakers, and academics interested in understanding the intricacies of value creation and risk management in the context of mergers and acquisitions Index Terms- Mergers, Acquisitions, Risk management, Value creation, Facebook, Du Pont, WhatsApp.

EMPLOYEES’ RESISTANCE TO CHANGE DURING POST-MERGER INTEGRATION IN SERVICES ORGANISATIONS

Mergers and acquisitions are an important strategic option for a corporation to drive higher growth and profitability. Despite significant investments being made in mergers and acquisitions, past experiences indicate that many mergers and acquisitions fail. The failure is often attributed to employees’ resistance to change. Factors, such as organisation change, culture, leadership, trust, and communication, among others, lead to employees’ resistance to change. This issue has a significant impact on service organisations since human capital is their key source of competitive advantage. The purpose of this study is to determine factors influencing employees’ resistance to change during the post-merger integration. This paper synthesises findings from a systemised literature review of ‘peer-reviewed’ research papers, published from November 2020 to November 2023, in ProQuest and EBSCOhost databases with keywords ‘employees’ resistance to change’ and ‘post-merger integration’. The findings establish strategies managers could adopt such as creating a continuous learning environment, recognition of the existence of subcultures within a culture, greater involvement of middle managers in the integration phase, devising an appropriate reward plan for early adopters, and focusing on the pace of changes. The study outcomes will help organisations in designing effective post-merger integration programmes leading to efficient use of capital.

Post-Merger Integration Capability and Shareholder Value Added

Post-Merger Integration Capability and Shareholder Value Added

Value Creation after Chinese Firms Acquire Financially Distressed Overseas Firms: Viva’s Acquisition of Clarks Group

Purpose - In recent years, overseas mergers and acquisitions have become a crucial means for many enterprises to enter foreign markets, achieve diversification of corporate brands, expand business scope, increase transaction amounts, and rapidly scale corporate operations. This study aims to investigate value creation by acquirers and potential influencing factors to determine whether companies facing financial difficulties through overseas mergers can generate effective value.
 Design/Methodology/Approach - This study examines post-acquisition value creation by companies through literature review and analysis of financial data from the last three years. It adopts a case study approach, focusing on Viva Goods Company Limited’s acquisition of Clarks in the UK under LionRock. The goal is to explore value creation and influencing factors in this specific context.
 Findings - The study reveals that the issues of target companies in financial distress are concentrated on working capital, while historical advantages and market value do not decline synchronously. Therefore, when facing distressed target companies, the acquiring party can not only revitalize the target company through capital injection to quickly restore operational status, expand market share, and form new competitive strength but also help its own company achieve short-term and long-term stock price increases, thereby gaining profits.
 Research Implications - This study explores factors in value creation, assessing target companies pre-merger, and analyzing post-merger integration for value growth. It focuses on risks and value in financially distressed target companies, aiding enterprises in acquiring distressed overseas firms, serving as a market research case for multinational corporate mergers.

TINJAUAN MAQÂSID AL-SYARÎ’AH TERHADAP BUDAYA ORGANISASI DAN SUMBER DAYA MANUSIA DALAM KASUS MERGER BANK SYARIAH INDONESIA

Post-merger integration will definitely bring up new dynamics or problems in aspects of corporate culture and human resources. The clash of organizational culture conflicts is a critical factor that determines the success or failure of a merger process, therefore, the topic of organizational culture is an important one to study because, from here, the identity of a business organization will be revealed. Implementation of a good organizational culture will definitely be directly proportional to sharia compliance. Two years after the merger, Bank Sharia Indonesia has shown a positive trend towards the company's performance. The problem of this research can be formulated as follows: how is the strategy of Bank Sharia Indonesia in harmonizing organizational culture clashes during mergers, how is the implementation of sharia values (sharia compliance), and how is the review of maqâsid al-syarî'ah in both of these? This study aims to determine the strategy of Bank Sharia Indonesia in harmonizing organizational culture clashes that arise during a merger and how it is implemented in adherence to sharia values. The method used in this research is descriptive-qualitative with a case study approach. The results of this study found BSI strategies for harmonizing organizational culture. First, the BSI founder created the "AKHLAK" work culture, called trustworthy, competent, harmonious, loyal, adaptive, and collaborative, which was applied to all BSI personnel. Secondly, they consolidated before the merger the legal action of the three banks in the merger process; BSI did not lay off any of the HR of the banks participating in the merger.

Chinese Multinationals’ Dynamic Integrations in the Developed Market: From a Resource Dependence Perspective

Integrating the developed-market resources after acquisitions is a crucial tool for Chinese multinational enterprises (CMNEs) to accelerate industrial high-quality development. However, existing theories have scarce thorough explanations of the dynamic mechanism of CMNEs’ post-merger integrating resources. Our research aims at disclosing CMNEs’ post-merger integration (PMI) long-term dynamics under resource relatedness changes. We applied a multiple-case study with four typical CMNEs’ German-market PMI cases and proposed a theoretical framework based on a coding analysis of 38 interviews. Our findings highlight that: CMNEs change initial gentle integrations (partnering/preservation) to balance dependence when pre-merger resources complementary decreases with similarity increasing, or to extreme dependence when pre-merger resources similarity continually increases to extremely high. Pre-merger resource relatedness basics and later changes and CMNEs’ dynamic capability (threat and development potentials’ perception capabilities and utilization capability) are crucial factors in promoting CMNEs’ PMI changes. Our originality lies in that we consider the interactions resource relatedness changes and CMNEs’ PMI dynamics, strongly replenishing the deficiency of current PMI dynamic studies that lack considerations of resource relatedness changing; also, we simultaneously consider the two facets of dependence asymmetry and joint dependence such that broadened the application of resource dependence theory (RDT) in PMI studies. Our study offers managerial insights into CMNEs’ development leapfrog through acquisitions in developed markets that CMNEs should focus on the vital role of inter-firm resource relatedness changing. Initial gentle integration can be deepened when original resource backgrounds become more similar but should be cautious of the effect of power imbalance and selfish actions.

Post-merger IT Integration in Banking: Literature Review

IT is a critical feature of post-merger integration in modern banking but academic coverage is sparse and industry organizations keep most of the practically useful knowledge in-house. This review analyses key operational aspects of the IT integration process, identifies its core guiding principles, produces an extended process timeline, and highlights the special importance of IT risk management. It presents a holistic view of the academic theory and practice-based insights around the main stages of the IT integration process, identifies knowledge gaps, and highlights potential directions for future research.

Does the merger improve the operating performance of the company? Evidence from the beverage industry in India.

Background: There is fierce market competition both locally and globally. Every organisation seeks to maintain itself and, more crucially, to develop quickly through inorganic means. The expansion of a company through mergers and acquisitions is an inorganic process. Organic growth takes a very long period and is time-bound, but inorganic growth through mergers may be achieved quickly. This research aimed to determine whether the operating results of Indian beverage firms have improved after the merger or not. Methods: In order to assess merger-related advantages to the acquiring firms, this study used the operating performance technique, which contrasts the pre-merger and post-merger performance of corporations using accounting data. Secondary data were used to carry out this study. The operating performance was assessed on six operating parameters (ratios) i.e. Operating Profit Margin, Gross and Net Profit Margin, Debt-Equity, Return on Net Worth and Capital Employed. The comparison was done for three years pre and post-merger period of these operating ratios. Results: The findings demonstrate that mergers do not seek to increase owner wealth. This finding shows that rather than just becoming larger and achieving covert goals, managers should pay more attention to post-merger integration challenges in order to produce merger-induced synergies. Conclusion: This study shows that the M&As have not had a good effect on a company's operating performance, especially for the chosen beverage companies in India. Since financial measures cannot fully account for the influence of mergers on business performance, future research may create other metrics for merger-related gains. Research that provides profound insights into the causes and trends of post-merger business performance through the different types of mergers and industries would also be beneficial.

Accelerating systemness through shared vision and culture

As health systems across the United States consolidate, tremendous potential exists to expand and optimise their breadth and depth by integrating services so that patient care is coordinated, supportive and equitable. The financial pressures and workforce crisis resulting from the COVID-19 pandemic have further exacerbated the need for fiscal discipline and operational efficiencies that can come from effective, system-wide integration. Yet many health systems continue to fall short of achieving the promise of post-merger integration and the value it can create for the diverse communities they serve. This paper explores one health system’s journey from ‘operational synergies’ to full ‘systemness’ enabled by a shared vision laser focused on a commitment to frictionless, patient-centred care through enabling care teams to do their best work, accelerating integrated operations and building an inclusive culture. It will explore the journey of a system in name only (Wellforce) to a unified team with a single brand (Tufts Medicine) and a shared commitment to the future with a mission to empower people to live their best lives. This case study will describe how the system evolved, starting from the development of a transformational Strategic Vision, through the shared trials of the COVID-19 pandemic and its effect on patients and providers. Having a shared vision is an essential first step to building systemness. Bringing that vision to life requires significant discipline and culture change. It requires a systemic approach and unwavering leadership, rooted in a shared philosophy, deep commitment and aligned behaviour. The case study will continue with an exploration of the path system and entity leaders took to identify shared priorities, adapt organisational and governance structures, and engage more than 14,000 clinical and administrative staff and physicians in building an inclusive culture with a clear and actionable commitment to anti-racism. It is a story about moving from words and ideas to action and removing the barriers that impeded progress.

An Analysis of Cyber Threat in the Merger and Acquisition Process and the Role of Cyber-security for a Successful Merger

Businesses are increasingly giving cybersecurity the attention it deserves to facilitate successful mergers and acquisitions. Cyber security due diligence is not only essential for just the acquiring company. Excellent cybersecurity benefits both sides of the M&A process. A clean bill of health concerning cybersecurity can make a target firm more attractive, and cybersecurity best practices on both ends make for a smoother, more secure transition period. This Research paper analysis the major cyber threat possible in Merger and Acquisition cases and provide deep understanding of the cyber risk in merger deals, the role of due diligence in Cyber Security and migration strategies for Cyber Risk in merger. This paper concludes that cybersecurity is a critical consideration in the M&A process, with data breaches and cyber threats posing significant risks to both acquiring and target companies. By adopting a proactive and multi-layered approach to cybersecurity, businesses can mitigate risks, protect sensitive data, and foster a smooth post-merger integration. Prioritizing cybersecurity throughout the M&A lifecycle is essential in today's digital landscape to safeguard against evolving cyber threats.

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.