Reasons for Frequent Failure in Mergers and Acquisitions: A Comprehensive Analysis
This is an important book. The topic is important, and Dr. Straub approaches it with a new approach. In fact, one could say that the book’s importance stems from its lack of disciplinary focus, relying instead on a holistic understanding of the phenomenon. Too often, academic research is pursued within a narrowly defined academic “field”, necessarily blinding researchers to realities whose essence is inter-disciplinary. This is typically the case with research on Mergers & Acquisitions, making most of the “findings” relatively unimportant for practice. Yet M&A are a crucial part of business development. It is evident that companies’ long-term success is at least partially dependent on their strategic actions. And these are often shaped in practice by merger and acquisition activity. Thus phenomena as varied as globalization, value-chain optimization, or product diversification are often implemented as M&A operations. In no few cases, M&A activity constitutes the company’s strategy. If, as noted above, strategic moves do have an impact on lo- term success, it follows that M&A activities are at the core of many business successes... and failures. As such, they play an important role in the development of the whole society: wealth is created (or destroyed) mostly by companies. Perhaps the most remarkable aspect of the phenomenon is its very high failure rate.
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Absolute Performance acquiring firm acquisition experience acquisition performance acquisition premium Bidding Process Churchill 1999 companies company’s competence comprehensive model constructs convergent validity cultural differences diversification due diligence economic economies of scale effect on M&A empirical Figure Financial Aspects Finkelstein 1999 firm’s free cash flow Haspeslagh and Jemison Hitt inner model integration Kusewitt Larsson and Finkelstein latent variable low Very high Lubatkin M&A activities M&A performance original managerial market complementarity market power market similarity measure Mergers and Acquisitions multiple regression Multiple Regression Analysis organizational behavior Original sample estimate outcomes outer loadings performance original sample perspective post-M&A performance potential production operation complementarity production operation similarity Purchasing Power questionnaire Ravenscraft and Scherer relatedness relationship Relative Performance respect of M&A shareholders Simple Regression Analysis Sirower standard errors strategic logic Strategic Management Journal structural diagram Synergy Realization T-statistic Significance T-values Table theory Trautwein 1990 University of Geneva variance explained R2