Critical Success Factors in Mergers and Acquisitions in South Africa

Nyambe, Ophelia
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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.
MBA thesis - WBS
Mergers and acquisitions