Mergers and profitability: a managerial success story?

Article Abstract:

Since 1983 expenditure on acquisitions in the UK has more than doubled in real terms, despite the fact that the consensus of opinion in the academic literature is that acquisitions are not, on average, performance enhancing for the acquiring firm. Such literature, however, relates mainly to the acquisition of large, public companies. Drawing on survey evidence from 146 of the UK's top 500 companies, this article reports the results from a survey which encompasses all takeovers. The study revealed that is the expected reward of increased profitability which has driven the takeover market and that it is this traditional measure which is used in ex-post evaluation. The major finding of the study is, however, that managers firmly perceive that their takeover activity has been performance enhancing for their company. The evidence presented does suggest that the integration of small acquisitions into an existing organizational structure may be achieved without severe problems of loss of control, and the subsequent decline in performance which beset large acquisitions. (Reprinted by permission of the publisher.)

Profits, Corporate profits

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Acquisition and divestiture as a response to competitive position and market structure

Article Abstract:

One theory of acquisition motivation holds that some acquisition activity is a defensive reaction to weak or deteriorating industry conditions and competitive position. Designated the 'defensive diversification hypothesis,' this motive has not been tested directly by relating firms' competitive circumstances to their subsequent acquisitive behaviour. This stuidy does so. Results show that a firm's prior circumstances are related to the intensity of both its acquisitions and divestitures, as well as the type of firms acquired. (Reprinted by permission of the publisher.)

Models, Management, Competition (Economics), Diversification in industry, Industrial diversification, Corporate divestiture, Divestiture

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Managing the post-acquisition integration process: how the human integration and task integration processes interact to foster value creation

Article Abstract:

The post-acquisition process in three foreign acquisitions made by Swedish mulinational companies is examined. The task integration and human integration processes are separated out, and effective integrations are achieved in a two-phase process.

Science & research, Mergers & Acquisitions, Mergers, acquisitions and divestments, International business enterprises, Multinational corporations

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