Michael A. Hitt, David King, Hema Krishnan, Marianna Makri, Mario Schijven, Katsuhiko Shimizu, and Hong Zhu
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780199601462
- eISBN:
- 9780191743320
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199601462.003.0004
- Subject:
- Business and Management, Finance, Accounting, and Banking, Strategy
Mergers and acquisitions have been a popular strategy, but the research suggests that acquiring firms create little or no value. Reasons for these outcomes include an inability to create synergy, ...
More
Mergers and acquisitions have been a popular strategy, but the research suggests that acquiring firms create little or no value. Reasons for these outcomes include an inability to create synergy, paying too high a premium, selecting inappropriate targets, and ineffective integration processes, among others. However, careful selection of targets and effectively implemented acquisitions can achieve synergy and create value. For example, targets selected that have capabilities complementary to those held by the acquiring firm provide the greatest opportunity for synergy creation. Acquisitions that provide new knowledge to the acquiring firm that can be used to enhance its competitive position often create value. For example, the knowledge gained from acquisitions can enhance innovation when the target firm has complementary science and technology to that held in the acquiring firm. In addition, cross-border acquisitions present significant opportunities, but they also provide more complex challenges for achieving synergy and creating value. Finally, research shows that executives frequently have trouble admitting failure and divesting acquisitions.Less
Mergers and acquisitions have been a popular strategy, but the research suggests that acquiring firms create little or no value. Reasons for these outcomes include an inability to create synergy, paying too high a premium, selecting inappropriate targets, and ineffective integration processes, among others. However, careful selection of targets and effectively implemented acquisitions can achieve synergy and create value. For example, targets selected that have capabilities complementary to those held by the acquiring firm provide the greatest opportunity for synergy creation. Acquisitions that provide new knowledge to the acquiring firm that can be used to enhance its competitive position often create value. For example, the knowledge gained from acquisitions can enhance innovation when the target firm has complementary science and technology to that held in the acquiring firm. In addition, cross-border acquisitions present significant opportunities, but they also provide more complex challenges for achieving synergy and creating value. Finally, research shows that executives frequently have trouble admitting failure and divesting acquisitions.
PENGCHENG ZHU
- Published in print:
- 2012
- Published Online:
- May 2013
- ISBN:
- 9780199754656
- eISBN:
- 9780199979462
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199754656.003.0020
- Subject:
- Economics and Finance, Financial Economics, International
Multinational corporations use cross-border mergers and acquisitions (M&As) as an important restructuring strategy. Multiple motivations exist for cross-border M&As. Most studies focus on returns ...
More
Multinational corporations use cross-border mergers and acquisitions (M&As) as an important restructuring strategy. Multiple motivations exist for cross-border M&As. Most studies focus on returns related to short-term announcements of acquiring and target firms in cross-border M&As and find significant variations in the performance outcomes. The results are mainly driven by market segmentation, the competitiveness of the corporate control market, and advantages associated with intangible assets. Long-term studies on cross-border M&As are limited and show mixed impact on acquiring and targeting firm performance. Information asymmetry, cultural barriers, and cross-country corporate governance all contribute to the complexity of the cross-border M&A activities. This chapter reviews the impact of these factors on acquisition performance.Less
Multinational corporations use cross-border mergers and acquisitions (M&As) as an important restructuring strategy. Multiple motivations exist for cross-border M&As. Most studies focus on returns related to short-term announcements of acquiring and target firms in cross-border M&As and find significant variations in the performance outcomes. The results are mainly driven by market segmentation, the competitiveness of the corporate control market, and advantages associated with intangible assets. Long-term studies on cross-border M&As are limited and show mixed impact on acquiring and targeting firm performance. Information asymmetry, cultural barriers, and cross-country corporate governance all contribute to the complexity of the cross-border M&A activities. This chapter reviews the impact of these factors on acquisition performance.
Satu Teerikangas
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780199601462
- eISBN:
- 9780191743320
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199601462.003.0021
- Subject:
- Business and Management, Finance, Accounting, and Banking, Strategy
This chapter extends prior research in the field of mergers and acquisitions (M&A) by focusing on the management of cross-border acquisitions. Using a qualitative grounded theory approach and basing ...
More
This chapter extends prior research in the field of mergers and acquisitions (M&A) by focusing on the management of cross-border acquisitions. Using a qualitative grounded theory approach and basing the findings on the study of nine acquisitions totalling 166 interviews, this chapter proposes an integrative perspective on the management of cross-border acquisitions. This perspective sheds light on the hidden dynamics of M&A progress and performance by taking into account the “silent forces” therein. Silent forces relate to the behavioral, human, and cultural dimensions of M&A activity. The findings highlight that these factors often fail to came to the attention of the managers concerned. Whilst strategic, structural, and financial factors are regularly attended to in acquisitions, it is argued that the difficulty experienced in making acquisitions work, progress, and perform stems from the frequent neglect of the less visible dimensions.Less
This chapter extends prior research in the field of mergers and acquisitions (M&A) by focusing on the management of cross-border acquisitions. Using a qualitative grounded theory approach and basing the findings on the study of nine acquisitions totalling 166 interviews, this chapter proposes an integrative perspective on the management of cross-border acquisitions. This perspective sheds light on the hidden dynamics of M&A progress and performance by taking into account the “silent forces” therein. Silent forces relate to the behavioral, human, and cultural dimensions of M&A activity. The findings highlight that these factors often fail to came to the attention of the managers concerned. Whilst strategic, structural, and financial factors are regularly attended to in acquisitions, it is argued that the difficulty experienced in making acquisitions work, progress, and perform stems from the frequent neglect of the less visible dimensions.
John Child, David Faulkner, and Robert Pitkethly
- Published in print:
- 2003
- Published Online:
- September 2007
- ISBN:
- 9780199267101
- eISBN:
- 9780191716706
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199267101.003.0001
- Subject:
- Business and Management, International Business
This introductory chapter presents the research project the book is based on and a summary of the main findings. The book’s focus is outlined as comprising the three keywords: management, ...
More
This introductory chapter presents the research project the book is based on and a summary of the main findings. The book’s focus is outlined as comprising the three keywords: management, international, and acquisitions. The research providing that focus involves study of acquisitions of UK companies by companies from France, Germany, Japan, and the USA. The study also provides a comparison with acquisitions by UK companies. It focuses on cross-border acquisitions for several reasons. Acquisitions are more problematic to manage than mergers. Acquiring companies choose whether and how to integrate subsidiaries, and also deal with both national and organizational culture. Comparing acquisitions by foreign companies in one country shows whether changes have distinct national patterns of management, and these raise the question of whether any particular approach leads to more favourable performance than others.Less
This introductory chapter presents the research project the book is based on and a summary of the main findings. The book’s focus is outlined as comprising the three keywords: management, international, and acquisitions. The research providing that focus involves study of acquisitions of UK companies by companies from France, Germany, Japan, and the USA. The study also provides a comparison with acquisitions by UK companies. It focuses on cross-border acquisitions for several reasons. Acquisitions are more problematic to manage than mergers. Acquiring companies choose whether and how to integrate subsidiaries, and also deal with both national and organizational culture. Comparing acquisitions by foreign companies in one country shows whether changes have distinct national patterns of management, and these raise the question of whether any particular approach leads to more favourable performance than others.
Geoffrey Jones
- Published in print:
- 2004
- Published Online:
- April 2005
- ISBN:
- 9780199272099
- eISBN:
- 9780191602184
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199272093.003.0006
- Subject:
- Economics and Finance, Economic History
This chapter examines the strategies firms have used to exploit and enhance their competitive advantage by crossing borders. It begins with corporate strategies for entering and existing countries. ...
More
This chapter examines the strategies firms have used to exploit and enhance their competitive advantage by crossing borders. It begins with corporate strategies for entering and existing countries. It then turns to collaborative strategies with other firms. Finally, the role of subsidiaries in the evolutions of multinationals is considered.Less
This chapter examines the strategies firms have used to exploit and enhance their competitive advantage by crossing borders. It begins with corporate strategies for entering and existing countries. It then turns to collaborative strategies with other firms. Finally, the role of subsidiaries in the evolutions of multinationals is considered.
