The Acquisition Integration Process: A Contingent Framework

  • Philippe C. Haspeslagh
  • Alison Been Farquhar

Abstract

This chapter reports the findings of a study into how acquisitions create value. It draws a distinction between acquisitions primarily driven by value transfer considerations, such as the purchase of undervalued assets or tax benefits, and acquisitions motivated by value creation. Only the latter are examined. Value creation is seen to result from the successful transfer of strategic capabilities (Lenz 1980) between both firms, where the purpose is to augment the competitive advantage of one or both firms (Jemison 1986a and b). The study also distinguishes between corporate and business-level acquisitions, and focuses on the latter. Although the initiation of this type of acquisition may originate at the corporate level, the intent is to contribute to a business-level development strategy.

Keywords

Permeability Europe Tate Conglomerate Stake 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Aldrich, H. and D. Herker (1977) ‘Boundary Spanning Roles and Organization Structure’, Academy of Management Review, April, pp. 217–30.Google Scholar
  2. Argyris, C. and D. A. Schon (1974) Theory in Practice: Increasing Professional Effectiveness ( San Francisco: Jossey—Bass).Google Scholar
  3. Bastien, D. T. and A. H. Van de Ven (1986) ‘Managerial and Organizational Dynamics of Mergers and Acquisitions’, discussion paper no. 46, Strategic Management Research Center, University of Minnesota, February.Google Scholar
  4. Been Farquhar, A. (1987) under the supervision of P. Haspeslagh, ‘Francoplast (A), (B), (C) and ( D)’, INSEAD pedagogical case.Google Scholar
  5. Berg, N. (1971) ‘Corporate Role in Diversified Companies’, unpublished paper ICCH 9–371–533, Harvard Business School.Google Scholar
  6. Bettis, R. A. (1981) ‘Performance Difference in Related and Unrelated Diversified Firms’, Strategic Management Journal, 2, pp. 379–94.CrossRefGoogle Scholar
  7. Bettis, R. A. and W. K. Hall (1982) ‘Diversificaton Strategy, Accounting Determined Risk, and Accounting Determined Return’, Academy of Management Journal, 45 (2), pp. 254–64.CrossRefGoogle Scholar
  8. Bower, J. L. (1970) Managing the Resource Allocation Process: A Study of Corporate Planning and Investment, Division of Research, Graduate School of Business Administration, Harvard University.Google Scholar
  9. Devine, I. (1984) ‘Organizational Adaptation to Crisis Conditions and Effects on Organization Members’, Academy of Management Proceedings, pp. 163–7.Google Scholar
  10. Duhaime, I. M. and C. R. Schwenk (1985) ‘Conjectures on Cognitive Simplification in Acquisition and Divestment Decision Making’, Academy of Management Review, 10, pp. 287–95.Google Scholar
  11. Eckbo, E. and H. Langohr (forthcoming) ‘Takeover Premiums, Disclosure Regulations, and the Market for Corporate Control: a Comparative Analysis of Public Tender Offers, Controlling Block Trades and Minority Buyouts in France’, Journal of Financial Economics.Google Scholar
  12. Elgers, P. T. and J. J. Clark (1980) ‘Merger Types and Stockholder Returns: Additional Evidence’, Financial Management, 9, pp. 66–72.CrossRefGoogle Scholar
  13. Haspeslagh, P. (1985) ‘Toward a Concept of Corporate Strategy for the Diversified Firm’, research paper no. 816, Graduate School of Business, Stanford University, (Strategic Management Journal, forthcoming).Google Scholar
  14. Haspeslagh, P. (1986) ‘Making Acquisitions Work’, Acquisitions Monthly, January.Google Scholar
  15. Haspeslagh, P. and D. B. Jemison (1987) ‘Acquisitions — Myths and Reality’, Sloan Management Review, winter, p. 53.Google Scholar
  16. Hayes, R. H. (1979) ‘The Human Side of Acquisitions’, Management Review, November, pp. 41–6.Google Scholar
  17. Howell, R. A. (1970) ‘Plan Now to Integrate your Acquisitions’, Harvard Business Review, November, pp. 66–76.Google Scholar
  18. Jemison, D. B. (1986a) ‘Strategic Capability Transfer in Acquisition Integration’, research paper series no. 913, Graduate School of Business, Stanford University, November.Google Scholar
  19. Jemison, D. B. (1986b) ‘Process Constraints on Strategic Capability Transfer in Acquisitions Integration’, research paper series no. 914, Graduate School of Business, Stanford University.Google Scholar
  20. Jemison, D. B. and S. B. Sitkin (1986a) ‘Corporate Acquisitions: a Process Perspective’, Academy of Management Review, January, vol. 11, no. 1, pp. 145–63.Google Scholar
  21. Jemison, D. B. and S. B. Sitkin (1986b) ‘Acquisitions: the Process Can Be a Problem’, Harvard Business Review, March–April, pp. 107–16.Google Scholar
  22. Jensen, M. C. and R. S. Ruback (1983) ‘The Market for Corporate Control: the Scientific Evidence’, Journal of Financial Economics, 11, pp. 5–50.CrossRefGoogle Scholar
  23. Jick, T. (1979) ‘Process and Impacts of a Merger: Individual and Organiza-tional Perspectives’, unpublished doctoral dissertation, Cornell University.Google Scholar
  24. Keller, R. T. and W. E. Holland (1975) ‘Boundary Spanning Roles in a Research and Development Organization: an Empirical Investigation’, Academy of Management Journal, vol. 18, no. 2, pp. 388–93.CrossRefGoogle Scholar
  25. Leifer, R. and A. Delbecq (1978) ‘Organizational/Environmental Interchange: a Model of Boundary Spanning Activity’, Academy of Management Review, January, pp. 40–50.Google Scholar
  26. Leighton, C. M. and G. R. Tod (1969) ‘After the Acquisition: Continuing Challenge’, Harvard Business Review, March–April, pp. 90–102.Google Scholar
  27. Lenz, R. T. (1980) ‘Strategic Capability: a Concept and Framework for Analysis’, Academy of Management Review, 5 (2), pp. 225–34.Google Scholar
  28. Levine, S. and P. E. White (1961) ‘Exchange as a Conceptual Framework for the Study of Interorganizational Relationships’, Administrative Science Quarterly, 5, pp. 583–601.CrossRefGoogle Scholar
  29. Levinson, H. (1970) ‘A Psychologist Diagnoses Merger Failures’, Harvard Business Review, 48, pp. 139–47.Google Scholar
  30. Lubatkin, M. (1987) ‘Merger Strategies and Stockholder Value’, Strategic Management Journal, vol. 8, pp. 39–53.CrossRefGoogle Scholar
  31. Marks, M. L. (1981) ‘Organizational and Individual Responses to Corporate Acquisition Impact’, unpublished doctoral dissertation, University of Michigan.Google Scholar
  32. Marks, M. L. and P. Mirvis (1985) ‘Merger Syndrome: Stress and Uncertainty’, Mergers and Acquisitions, summer, pp. 50–55.Google Scholar
  33. Montgomery, C. A. and H. K. Christensen (1981) ‘Corporate Economic Performance: Diversification Strategy versus Market Structure’, Strategic Management Journal, December.Google Scholar
  34. Mueller, D. C. (ed.) (1980) The Determinants and Effrcts of Mergers ( Cambridge, Mass.: Oelgeschlager, Gunn and Hain ).Google Scholar
  35. Organ, D. W. (1971) ‘Linking Pins Between Organizations and Environment’, Business Horizons, December, pp. 73–80.Google Scholar
  36. Rumelt, R. P. (1974) ‘Strategy, Structure and Economic Performance’, Division of Research, Graduate School of Business Administration, Harvard University.Google Scholar
  37. Sales, A. and P. H. Mirvis (1985) ‘When Cultures Collide: Issues in Acquisitions’, in J. R. Kimberly and R. E. Quinn (eds), New Futures: The Challenge of Managing Corporate Transitions ( Homewood Il.: Dow Jones-Irwin ).Google Scholar
  38. Salter, M. S. and W. A. Weinhold (1979) Diversification Through Acquisition ( New York: Free Press).Google Scholar
  39. Searby, F. W. (1969) ‘Control Post Merger Change’, Harvard Business Review, September.Google Scholar
  40. Selznick, P. (1957) Leadership in Administration ( New York: Harper and Row).Google Scholar
  41. Shanley, M. T. (1987) ‘Post Acquisition Management Approaches: an Exploratory Study’, unpublished doctoral dissertation, University of Pennsylvania.Google Scholar
  42. Shirley, R. C. (1977) ‘The Human Side of Merger Planning’, Long Range Planning, 10, pp. 35–9.CrossRefGoogle Scholar
  43. Sinetar, M. (1981) ‘Mergers, Morale and Productivity’, Personnel Journal, November, pp. 863–7.Google Scholar
  44. Singh, H. and C. A. Montgomery (1987) ‘Corporate Acquisition Strategies and Economic Performance’, Strategic Management Journal, vol. 8, no. 4.Google Scholar
  45. Souder, W. E. and A. K. Chakrabarti (1984) ‘Acquisitions: Do They Really Work Out?’ Interfaces, 14, July-August, pp. 41–7.Google Scholar
  46. Thompson, J. (1967) Organizations in Action (New York: McGraw-Hill).Google Scholar
  47. Tushman, M. L. and R. Katz (1980) ‘External Communication and Project Performance: an Investigation into the Role of Gatekeepers’, Management of Science, November, vol. 26, no. 11.Google Scholar
  48. Tushman, M. L. and T. J. Scanlan (1981) ‘Boundary Spanning Individuals: their Role in Information Transfer and their Antecedents’, Academy of Management Journal, vol. 24, no. 2, pp. 289–305.CrossRefGoogle Scholar
  49. Victor, B. and R. S. Blackburn (1987) ‘Interdependence: an Alternative Conceptualization’, Academy of Management Review, vol. 12, no. 3, pp. 486–98.Google Scholar

Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Limited 1994

Authors and Affiliations

  • Philippe C. Haspeslagh
  • Alison Been Farquhar

There are no affiliations available

Personalised recommendations