No. 36: What matters for organizing M&As successfully?

Abstract

How is merger and acquisition (M&A) success associated with firm internal M&A process organization? The literature thus far acknowledges that unobservable internal firm characteristics are at least as important as observable firm- and deal-specific characteristics in regard to explaining M&A success. Thus, this paper directly asks M&A experts around the globe to shed more light on this important issue. We investigate three indices, capturing the degree of M&A 1) process standardization, 2) process duration, and 3) process attention. Next, we analyze the process participation among four organizational layers, i.e., the functional involvement of the a) top management team, b) headquarters, c) business unit management, and d) business unit functions. We predict and find that all three indices are positively associated with M&A success, while process standardization and attention to deal strategy are of particular importance. Turning to the four organizational layers, a textured analysis shows that, for instance, target valuation should be performed by the headquarters functions but not by the top management team or the business unit. Overall, our findings are important to better understand unexplored M&A success drivers and provide directions for future research. Finally, our results might help practitioners adjust their M&A process organization to further improve their M&A success.

Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, European School of Management and Technology in Berlin and Goethe University Frankfurt who share the same research agenda.