Factors influencing post-merger and acquisition success of selected multi-national firms

Abstract

Orientation: Mergers and Acquisitions (M&A) is the process of combining companies to achieve certain goal(s). Companies take advantage of M&A to expand their business for better growth and profit. Although some scholars might argue that the strategic motive can be financial, or non-financial (Eun & Resnick 2007), others might have indicated different factors such as economy of scale and market shares (Evans, 2010) and subsequently more profit. It is estimated that more than 75% of new M&A eventually fail to meet the expected gains. Many factors have influenced and continue to influence post-merger and acquisition success of multi-national firms. Research purpose: This study investigated factors and reasons behind the post Mergers and Acquisitions successes and/ or failures, with a focus on the relationships between these factors, if any. A Fuzzy Cognitive Map (FCM) was drawn to illustrate the strength or weakness of such relationships. Motivation for the study: The aim of this study was to understand and unpack M&A. Based on the research done, this topic appeared to have a limited number of specialised professionals in its field. In addition, the intention was to contribute to the body of research from a different point of view, precisely from the view point of Practitioners, Experts and Management, who experienced the process first-hand; paying special attention to detailed analysis rather than generalised definitions. Research design, approach and methodology: A combination of theoretical frame of reference in the form of literature reviews, were used to investigate the different possible factors and point of views on the topic of M&A. This was combined with qualitative and semi quantitative research methods and a mixed method approach was employed. The research Paradigm dictated the choice of Predictive Data Analytics method, as it was suitable for the type of research that uses data mining, collection from interviews (qualitative), surveys and FCM adjacency matrix (semi-quantitative) research methodologies, both of which were used in this research, utilising elements of both in the same study. Main finding: Research results exposed that a noteworthy number of respondents and interviewees (managers) rated the following as important factors and contributors to the success of the M&A integration process: • Positive correlation for Planned Integration Execution; positive correlation for Due Diligence and a Negative correlation with demand for growth. Practical implication: A quote attributed to Abraham Franklin specified that failure to plan results is a plan to fail (Raje, 2008). Special planning should be given to human resources the people most impacted by the M&A - most especially at the beginning and throughout the integration because overall integration success or failure is likely to have a direct correlation with the buy in, support and execution of the people involved. The integration process must be well planned to enhance success. In addition, Due Diligence findings should be taken into consideration when formulating the implementation plan. Contribution/ value add: No preceding scholar’s article or research may have been published or available, investigating the relationship between the factors and elements impacting the success or failure on the M&A integration process presented on a Fuzzy Cognitive Map (FCM). Findings will identify and appropriately address gaps and highlight any contradictions in the literature.