Is speed of integration really a success factor of mergers and acquisitions? An analysis of the role of internal and external relatedness
Is speed of integration really a success factor of mergers and acquisitions? An analysis of the role of internal and external relatedness
Homburg C., Bucerius M.Strategic Management Journal, April 2006, Vol. 27 No. 4, Start Page: 347, No. of pages: 21
Purpose – To provide an improved understanding of the role of speed as a success factor for mergers and acquisitions (M&A). Design/methodology/approach – Compares the emphasis placed on speed of post-merger integration (PMI) in business practice and its comparative neglect in the research literature. Briefly discusses the literature on speed of integration and on the role of relatedness in M&A performance. Develops a theoretical model linking internal and external relatedness and presents a matrix on these two dimensions illustrating the beneficial and detrimental effects of PMI that may be anticipated in each quadrant, according to whether external and internal relatedness are high or low. Uses management style. Strategic orientation and performance to assess internal relatedness in the context of relatedness of target markets and relatedness of market positioning. Tests the resulting hypotheses using detailed primary data from a large scale survey, conducted in 2002, of horizontal M&A between companies in central Europe that took place between 1996 and 1999. Findings – Dismisses the view that speed of integration is always beneficial. Finds that speed of integration is most beneficial to M&A success in the case of low external and high internal relatedness. Also shows that speed of integration is most detrimental where internal relatedness is low and external relatedness is high. Notes that the impact of PMI speed on merger success is least where both relatedness dimensions are high or both are low. Originality/value –Concludes that in some circumstances, the benefits of rapid post-merger integration may be less than the costs.ISSN: 0143-2095Reference:35AJ035
Keywords: Integration, Acquisitions and mergers, Organizational effectiveness
