Critical Success Factors in Mergers and Acquisitions in South Africa
Date
2012-10-04
Authors
Nyambe, Ophelia
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This research was conducted to identify critical success factors (CSFs) in
mergers and acquisitions (M&As) in South Africa. It is estimated that between
60 and 80 percent of M&As fail to create value for shareholders (Marks and
Mirvis, 2001; Selden and Colvin, 2003). Developed countries have done several
studies on M&As but this literature has not been theoretically integrated
(Haleblian, Devers, McNamara, Carpenter and Davison, 2009). The studies are
fragmented across diverse areas of academic fields such as strategic
management, international business, human resource management, and
finance (Shimizu, Hitt, Vaidyanath and Pisano, 2004). The complexity of
engaging in M&As is exacerbated by the fact that the acquisition process
consists of many other complex interdependent sub-activities, such as due
diligence, negotiation, financing and integration (Hitt, Harrison and Ireland,
2001). This research has consolidated the literature and highlighted the CSFs
for M&As in the South African banking industry based on an in-depth analysis of
the Barclays Bank Plc acquisition of Absa (formerly Amalgamated Banks of
South Africa) which was completed in 2005. Semi-structured interviews were
used to collect data from twenty former team members of the Absa and
Barclays’ integration team. The data was analysed using content analysis.
Eighteen CSFs were tested on Absa with seventeen being validated,
demonstrating that the factors affecting M&As in developed countries are also
applicable to South Africa. An additional factor not mentioned in literature,
namely incentivising key people, was identified in the Absa context. The broad
categories of the factors validated were strategic alignment (relatedness,
complementarities, new geographies, new products, new customers),
acquisition experience of the acquirer, due diligence, size of the acquirer, low
premium, communication, selection of new leadership, integration structure,
appropriate cultural integration, involvement of top leadership, integration
speed and certain external factors. Payment method was not a CSF in the Absa
and Barclays M&A.
Description
MBA thesis - WBS
Keywords
Mergers and acquisitions