Mergers and Acquisitions, Motives, Share value creation, Financial performance. Abstract An extensive review of literature has been carried out in order to get a good understanding in the topic of Mergers and Acquisitions. Literature review has been done from books, journal, published papers etc.
Share by email Much common wisdom surrounding post merger integration is anecdotal, at best. These profiles can point to crucial areas on which to focus. Many top corporate managers are faced with the challenge of a post merger integration PMI at least once in their career.
And empirical studies indicate that one of every two PMI efforts fares poorly. There are no hard and fast rules to ensure that a given merger will result in corporate wedded bliss. But we have found that quantitative analysis—something PMI managers have largely overlooked—can evoke both surprising questions and even more revelatory answers.
Certain post merger integration scenarios, which we describe below, can create very difficult starting points for the companies and the managers involved. If a company faces one of the less favorable scenarios, it becomes doubly important to assess the likely causes of difficulty and to address these proactively and thoroughly.
Extrapolating from our quantitative analysis, certain PMI myths emerged that can influence both the effectiveness of the PMI process and the comparative difficulty in realizing the value of the merger — proposed or imminent. Using statistical analysis in an effort to minimize risks and discard outdated notions can help an organization stack their odds in favor of a more successful post merger integration.
Hard data, hard truths The literature on merger successes is voluminous but for the most Literature review of post merger integration anecdotal. No doubt these lessons learned can be helpful in minimizing mistakes and improving execution.
Where they fall short, however, is in failing to make use of the quantity of data available from a vast collective experience in post merger integration.
Simply put, we have witnessed a lot of good and bad merger aftermaths and know it is possible to approach the next one armed with a quantitative understanding of the risks involved.
How can we quantify merger success? Many studies use capital market-based indicators. But doubts are emerging as to how to isolate the single effect of a post merger integration on share prices.
How can we separate this specific effect from other influences — e. Defining the factors Expressing these 35 factors with sufficient rigor required precise definitions. We operationalized execution plan viability by analyzing integration steps that were performed e.
Our research included the number of months covered by the integration plan and the number of people involved in the integration planning process from both the buyer and the target companies. As for business process heterogeneity, we measured this through the revenue split by customer segments, regions and product groups.
Changes at the managerial level included factors that are easily measurable such as scope of redundancies and the magnitude of relocations as a percentage of management positions.
At the steering committee level, we calculated the percentage of steering committee members that had previously conducted large scale organizational transformation projects.
Limited human resource capacity was also measured along the organization for the steering committee, integration manager, team leader and project teams. The major question we asked: What percentage of time did they dedicate to project work? We began by defining PMI success based not on share prices but on the extent to which targets like cost synergies, cross selling or know-how transfer were met.
Factors like implementation costs going over budget or key personnel leaving the company in droves may result in major delays, even as key targets are attained. Our team examined over factors discussed as potential risks. At its core, our research identified those factors that influence the post merger risk based on solid statistical criteria.
When the number-crunching frenzy had ended, we found only 35 factors within four categories to be statistically significant in influencing PMI success. Post merger risks to watch for We then statistically condensed these 35 factors into four categories of risks—synergy, structure, people and project—that can undermine the success of post merger integration.
Synergy risks comprise all factors stemming from inadequate synergy realization planning, while structural risks arise from mismatched organizational structures and processes.
People risks refer to factors based on personnel resistance. Project risks, the last category, involve project-related obstacles to post merger integration.
Drawing from these four categories of risks, it is possible to assess in advance the comparative difficulty of a specific post merger integration.
Our analysis suggests that post merger integrations differ fundamentally in terms of risk profile as well as success potential, and that managers face very different post merger challenges.
PMI risk types Faced with the challenge of a post merger integration, managers are confronted by one of four risk types, each derived from empirical analysis of our PMI database. Each is named with an allusion to the type of challenges it poses. Each is defined by the levels of risk in the four categories just described: Going a step further, we can calculate how a particular merger is to be rated in each of these risk classes by assessing the underlying factors via benchmarking with our PMI database.
This lends some structure to what can be an otherwise well-intended but unsubstantiated assessment. First the good news:A Study of Literature Review on Corporate Restructuring Nisarg A Joshi1, Jay Desai2, Arti Trivedi3 1 and its impact on making post merger integration successful.
This is first study to apply merger IT integration. 2. Literature Review Process. Post Merger Integration Lessons Learned. A Review of Business Consulting Literature to assess the Effects of Mergers and Post-Merger Integration. POST-MERGER IT INTEGRATION: AN IT CULTURE CONFLICT PERSPECTIVE cultural integration in post-merger is getting important (Curtis and Chanmugam, ).
Leidner and 2 LITERATURE REVIEW Merger ambition and IT integration . An extensive literature review on the role of human factor in post-merger integration (PMI) depicts how integration on people level may influence the execution of entire merger and therefore its possible success or failure.
A Framework for Understanding Post-Merger Information Systems Integration Maria Alaranta A Framework for Understanding Post-Merger Information Systems Integration 6 It presents the first comprehensive literature review on post-merger IS.
Post-merger integration leader and acquisition success: A theoretical model of perceived linkages to success of mergers and acquisitions A DISSERTATION.