Skip to main content
SpringerLink
Log in

Literature review

  • Chapter
Post-Merger Integration and the Management of Information and Communication Systems

Part of the book series: Strategie, Marketing und Informationsmanagement ((SMI))

  • 117 Accesses

Abstract

As mentioned in the introduction, every merger is unique, complex and with overreaching consequences. Thus, achieving a satisfactory generalisation is not only difficult, but also risky and perhaps inappropriate. There are indeed a number of ways, based on a variety of academic disciplines, to look at mergers and acquisitions. This very difficulty, also underlines the inherent complexity of the M&A field, experienced by both researchers and practitioners alike. Mentioning complexity constitutes a reasonable starting point. Nonetheless, at least within the context of mergers, this complexity needs not only be mentioned, but also seriously considered and anticipated.

“Nothing can be said or learned about acquisitions in general.”

[Haspeslagh & Jemison (1987) — quoted in Sirower (1997:p.158)]

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes

  1. Which is why the specifics of deal preparation and of the acquisition transaction (negotiation and deal) are not covered. This is not to undermine their importance, but the topic concerns post merger integration

    Google Scholar 

  2. The term “failure” is avoided here, because different studies define failure in different ways and use different metrics.

    Google Scholar 

  3. Sirower(1997:p.145)

    Google Scholar 

  4. See for example Bieshaar, Knight & van Wassenaer (2001). The authors compare: acquisition, merger, sale, and joint venture / alliance deals (a total of 479) in terms of the stock market response to their announcement

    Google Scholar 

  5. See for example: Cooke (1986), Pritchett (1997), Scherer (2002c:pp.14–15)

    Google Scholar 

  6. To be more specific, David Ricardo’s theory of Comparative Advantage

    Google Scholar 

  7. See also for example: Healy, Palepu & Ruback (1992), Andrade, Mitchell & Stafford (2001: p. 116)

    Google Scholar 

  8. See for example: Ravenscraft & Scherer (1987:pp.192–194), Caves (1987), Kaplan & Weispach (1992), Pautler (2003), Christofferson, McNish & Sias (2004)

    Google Scholar 

  9. The partial equilibrium welfare model states that only a small gain in efficiency is necessary to offset a relatively large gain in market power and as such mergers are generally beneficial. The loss suffered by the consumers resulting from the increase in prices is more than outweighed by gains to producers

    Google Scholar 

  10. The imperfect information concerning present values of shares plus inability of past data to predict future prices due to economic disturbances (e.g. rapid technological change), lead to a temporary disequilibrium. This rapid change of share prices induces speculation and hence increased merger activity

    Google Scholar 

  11. Pritchett(1997:pp.05–07)

    Google Scholar 

  12. For more details on executive motives refer to section 2.1.3

    Google Scholar 

  13. See for example: Cooke (1986:p.26), Gaughan (1991: p.102), Sirower (1997:p.05), Gruca et al (1997:p.605). Another variation frequently used is: ‘1+1=3’ [see for Example: Eisenhardt & Galunic (2000:p.91), Kelly & Cook (2001:p.04)

    Google Scholar 

  14. See for example: Ghemawat & Ghadar (2000)

    Google Scholar 

  15. See for example: Sirower (1997), Farrell & Shapiro (2000)

    Google Scholar 

  16. See for example: Gruca, Nath & Mehra (1997), Eisenhardt & Galunic (2000), Goold & Cambell (2000), Rovit & Lemire (2003)

    Google Scholar 

  17. Eccles, Lane, & Wilson (1999:pp.47–51)

    Google Scholar 

  18. Anslinger & Copeland (1996:pp.97–98), Aiello & Watkins (2000:pp.24–25). There are of course other reasons such as: a more rigorous selection / screening of acquisition candidates, professional due-diligence, minimum disruption of operations, and focus financial results/ incentives. This point of view is however not without its critics. Healy, Palepu, & Ruback (1997:pp.50–55) take a diametrically different viewpoint. They quote studies indicating that, while strategic acquisitions generated substantial gains for the acquirers, financial ones broke-even at best. Moreover, due to the ‘friendly character’ of strategic acquisitions the premium tended to be lower

    Google Scholar 

  19. Sirower (1997:p.21), Kelly & Cook (2001:p.05), Christofferson, McNish & Sias (2001:p.03)

    Google Scholar 

  20. Fischer & Wirtgen (2000:pp.30–33), Devine (2002:pp.156–162)

    Google Scholar 

  21. Beckier, Bogardues, & Oldham (2001)

    Google Scholar 

  22. Gaughan(1991:pp.145–147)

    Google Scholar 

  23. The assumption that the market value always represents the ‘true’ and ‘correct’ value of a company

    Google Scholar 

  24. According to Ghewamat & Ghadar (2000:p.70), a number of parties, such as investment bankers, are usually involved in merger and their motives vary

    Google Scholar 

  25. Sirower(1997:p.160)

    Google Scholar 

  26. Ghewamat & Ghadar (2000:p.70)

    Google Scholar 

  27. Fulmer (2000:pp.25–27)

    Google Scholar 

  28. At this point it should be made clear to the reader that the intention is not to cover all existing frameworks and/or models. Only the most prevalent ones are covered

    Google Scholar 

  29. Book review dated 24 August 1997

    Google Scholar 

  30. See for example: Gaughan (1991), Barkema & Vermeulen (1998)

    Google Scholar 

  31. See for example: Anslinger & Copeland (1996), Healy, Palepu & Ruback (1997)

    Google Scholar 

  32. See for example: Hagedoorn & Sadowski (1999), Ghewamat & Ghadar (2000), Eisenhardt & Galunic (2000), Fubini (2000), Goold & Cambell (2000)

    Google Scholar 

  33. See for example: Gruca, Nath & Mehra (1997), Grubb & Lamb (2000)

    Google Scholar 

  34. See for example: Eisenhardt & Galunik (2000)

    Google Scholar 

  35. See for example: Wall & Wall (2000), Fischer & Wirtgen (2000), Strohmer (2001)

    Google Scholar 

  36. Strohmer (2001: pp.49–52)

    Google Scholar 

  37. Wall & Wall (2000:pp.119–141)

    Google Scholar 

  38. Even though the authors refer to frameworks related to strategic marketing (planning), it can be argued that the same also applies for strategic frameworks in general (including merger-related ones)

    Google Scholar 

  39. Minzberg, Ahlstrand & Lampel (1998:pp. 176–231)

    Google Scholar 

  40. The term ‘tools’ within this context refer to the so called ‘integration manuals’, containing a variety of templates and checklists. See for example: Galpin & Hemdon (2000:pp.07–18)

    Google Scholar 

  41. For a brief description refer to Ashkenas, DeMonaco & Francis (1998: pp. 154–156)

    Google Scholar 

  42. Galpin & Herndon (2000:pp.07–18)

    Google Scholar 

  43. For details see Fischer & Wirtgen (2000:pp. 122–129)

    Google Scholar 

  44. Example: ‘Communication is always good’ maxim. Communication also requires a considerable amount of effort and time. In addition, there are cases where communication gives rise to informal rumours, which in turn may negatively affect morale. Another dogmatic assumption is the very notion that merger activity always makes sense. In most cases, merger management methodologies advocate intensive screening, evaluation and selection of potential acquisition candidates. The very logic behind initiating acquisition is very seldom challenged

    Google Scholar 

  45. For example on the importance of setting up an effective integration project organisation and containing concrete steps to achieve that and mistakes to avoid

    Google Scholar 

  46. Stating for example that, communication is vital could constitute valuable advice, but it does not provide illumination on how, what, when, and to whom to communicate; all questions that need to be answered in order to render this piece of advice practice-relevant

    Google Scholar 

  47. The research focus is on integration. Therefore, the best practices / lesson from knowledge examined here are limited to PMI relevant ones

    Google Scholar 

  48. The term refers to ‘immunity’ against management’s messages. Reducing information overload, minimising distractions, and customising messages are key in getting and maintaining attention

    Google Scholar 

  49. Beckier, Bogardus & Oldham (2001:p.08) make an interesting point about the cost-cutting synergies accentuated during a merger. They argue that aggressive cost cutting distracts focus towards revenue growth. An interesting statistic they quote is that 2–3% growth on revenue can offset the failure of achieving 50% reduction of costs, while a 1% revenue loss requires 25% more cost savings than those anticipated

    Google Scholar 

  50. Biema & Greenwald (1997:pp.91–92) describe this as scarcity of management attention. Goold & Cambell (1998:pp.69–72), point out that the pressure associated with achieving synergies creates a diversion from daily operations / business, which in turn implies an opportunity cost associated with synergy

    Google Scholar 

  51. Schott (1999:p.76) advises for minimizing internal focus and on ensuring that end customers remain the focus of attention

    Google Scholar 

  52. Grubb & Lamb (2000) graphically examine and describe a number of possible options available for organisations willing to take advantage of their competitors’ merger activities and efforts

    Google Scholar 

  53. Komus & Reiter (2000:p.39) advocate a focus on quick wins in the context of IT integration during a merger. They define them as measures allowing great benefit with relatively small effort within a short time frame

    Google Scholar 

  54. Chapman, Dempsey, Ramsdell & Bell (1998:p.62)

    Google Scholar 

  55. Eccles, Lanes & Wilson (1999:pp.64–67)

    Google Scholar 

  56. Barkema & Vermeulen (1998:pp.21–22), Bekier, Bogardus & Oldham (2001: pp.08–09)

    Google Scholar 

  57. Meier & Spang (2000:p.09)

    Google Scholar 

  58. Pritchett (1997:p. 114) argues that mergers are revolutionary in nature (as opposed to evolutionary). As such they represent a unique event in a company’s history

    Google Scholar 

  59. Ghewamat & Ghadar (2000:p.70), claim that the motives and agendas of third parties are not always unquestionable. In a similar manner, Wall & Wall (2000:p.47) entertain the possibility that speedy integration is widely advocated by consultants due to self-serving motives (i.e. creation of necessity for their assignment). The argument is that, an organisation’s resources cannot usually cope with the demands of a speedy integration effort, necessitating in that way the utilisation of external parties. A similar argument can be applied to explain the extensive underlining of merger experience as a guarantee for success

    Google Scholar 

  60. Anslinger & Copeland (1996:p.106), Pritchett (1997:pp.127–132), Viner, Rhodes, Ribadeau & Ivanov (2000:p.05), Grubb & Lamb (2000:pp.85–112), Bert, MacDonald & Herd (2003:pp.44–45)

    Google Scholar 

  61. Yunkers (1983:p.82)

    Google Scholar 

  62. Komus & Reiter (2000:p.34)

    Google Scholar 

  63. Grubb & Lamb (2000:pp.85–112)

    Google Scholar 

  64. Chapman, Dempsey, Ramsdell & Bell (1998:p.64)

    Google Scholar 

  65. Wall & Wall (2000:pp. 19–33) claims that even though a lot of mergers start off as mergers of equals, one eventually dominates (they use George Orwell’s famous quote: “All animals are equal but some are more equal than others.”). The argument is that decisiveness is key and cannot easily happen by committee or co-CEOs

    Google Scholar 

  66. Goold & Cambell (1998), Cliffe (1999), Goold & Cambell (2000)

    Google Scholar 

  67. The mentioned examples of theories and concepts are covered in more detail in: Fischer & Wirtgen (2000:pp.33–63)

    Google Scholar 

  68. Fulmer (2000:p. 159) states that cultural change can easily last between 3–5 years. This, combined with the’ soft’ and indirect impact on results leads a number of managers to refuse investing time and effort in dealing with culture altogether

    Google Scholar 

  69. Galpin & Herndon (2000:pp.170–180), Christensen & Overdorf (2000:p.116), Orr & Hatakenaka (2001:pp.77–79), Hofer & Al-Sibai (2002), support this view. In addition, one could argue that even though managing cultural issues and change between two organisations could be feasible, this manageability decreases as the number of cultures / cultural dimensions involved in a merger increase. Consider for example the challenges posed by merging the cultures of three organisations in three different countries. A merger can involve more than two organisations after all

    Google Scholar 

  70. Keller (1990)

    Google Scholar 

  71. Cartwright & Cooper (1996)

    Google Scholar 

  72. Haspeslagh & Jemison (1991: pp. 143–144), Sirower (1997:p.40)

    Google Scholar 

  73. Strohmer (2001: pp. 109–132) argues against the cultural uniformity imperative, implied by cultural change, within the context of M&A. This aspect is, according to the author ignored in ‘cultural fit’ models. On the other hand, the focus of such models is on corporate culture. National culture differences may be exempt to those criticisms, due to the obvious obstacles posed by language and history, which may hinder cooperation at all levels (at least in the short-term)

    Google Scholar 

  74. Merger success / failure seems to be (and maybe should be) the main preoccupation

    Google Scholar 

  75. Haspeslagh & Jemison (1991: pp.58–60)

    Google Scholar 

  76. Refer to “geographical map — management model” analogy at the beginning of this chapter

    Google Scholar 

  77. See for example: Pritchett (1997), LaJoux (1998), Galpin & Herndon (2000), Habeck, Kröger & Träm (2000)

    Google Scholar 

  78. Chatham (1998), Hammer (2000)

    Google Scholar 

  79. Buhalis (1995)

    Google Scholar 

  80. Brown (2001a), Brown (2001b), Newsom-Ray (2002)

    Google Scholar 

  81. Wilmes (2003): Malik is quoted to have stated that: “Even though the disaster (i.e. merger failures) is taking place in front of everyone’s eyes, many managers are not affected”

    Google Scholar 

Download references

Authors
  1. Alexis Papathanassis
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2004 Deutscher Universitäts-Verlag/GWV Fachverlage GmbH, Wiesbaden

About this chapter

Cite this chapter

Papathanassis, A. (2004). Literature review. In: Post-Merger Integration and the Management of Information and Communication Systems. Strategie, Marketing und Informationsmanagement. Deutscher Universitätsverlag. https://doi.org/10.1007/978-3-322-81879-9_2

Download citation

  • DOI: https://doi.org/10.1007/978-3-322-81879-9_2

  • Publisher Name: Deutscher Universitätsverlag

  • Print ISBN: 978-3-8244-8245-0

  • Online ISBN: 978-3-322-81879-9

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation