Some acquisitions work; some don’t. Even as the merger wave continues unabated, managers and commentators disagree about its value — both to shareholders and to the long-term health of the acquiring firms. These authors explore several myths that now dominate the debate over what makes for a successful acquisition. They argue that the acquisition process itself is a critical factor in the deal’s ultimate fate.
1. D.B. Jemison and S.B. Sitkin, “Corporate Acquisitions: A Process Perspective,” Academy of Management Review 11 (1986): 145–163.
2. M.S. Salter and W.A. Weinhold, Diversification through Acquisition (New York: The Free Press, 1979);
PC. Haspeslagh, “Making Acquisitions Work,” Acquisitions Monthly, January 1986.
3. M.C. Jensen and R.S. Ruback, “The Market for Corporate Control: The Scientific Evidence,” Journal of Financial Economics 11 (1983): 5–50;
H. Singh and C.A. Montgomery, “Corporate Acquisition Strategies and Economic Performance,” Strategic Management Journal, in press.
4. We are grateful to Mai Salter for his insights into this distinction during several conversations on the topic.
5. Jemison and Sitkin (1986);
A. Rappaport, “Strategic Analysis for More Profitable Acquisitions,” Harvard Business Review, July–August 1979, pp. 99–110.
6. D.B. Jemison and S.B. Sitkin, “Acquisitions: The Process Can Be a Problem,” Harvard Business Review, March–April 1986, pp. 107–116.
7. A.F. Buono, J.L. Bowditch, and J.W. Lewis, “The Human Side of Organizational Transformation: A Longitudinal Study of a Bank Merger” (paper presented at the Academy of Management, San Diego, CA, August 11–14, 1985);
R.H. Hayes, “The Human Side of Acquisitions,” Management Review, November 1979, pp. 41–46;
A. Sales and PH. Mirvis, “When Cultures Collide: Issues in Acquisitions,” in New Futures: The Challenge of Managing Corporate Transitions, ed. J.R. Kimberly and R.E. Quinn (Home-wood, IL: Dow Jones-Irwin, 1985).
8. Haspeslagh (1986).
9. P. Haspeslagh, “Toward a Concept of Corporate Strategy for the Diversified Firm,” Strategic Management Journal, in press.
10. Singh and Montgomery (in press).
11. Jemison and Sitkin (1986).
12. Haspeslagh (1986).
Partial support for this research from the Strategic Management Program at the Graduate School of Business, Stanford University, is gratefully acknowledged.