Merger repair: when M&As go wrong

Galpin, Timothy J. and Herndon, Mark (2008) Merger repair: when M&As go wrong. Journal of Business Strategy, 29 (1). pp. 4-12.

Abstract

Purpose
– The company closed the deal over two‐years ago, but the organization is still not operating as one company: results are lagging, customers are defecting, and shareholders are restless. Management thought that they checked off all of the right deal actions, including: a thorough due diligence (operations, finances, systems, and people); assigning appropriate integration resources early and keeping them available throughout the integration process; developing and executing detailed integration plans; and measuring, tracking, and reporting implementation progress against the integration plans. But, somewhere, somehow, something went wrong – and it has to be fixed, or else. The transaction itself was completed too long ago for any action now to be truly considered “post‐deal integration.” The situation the company now faces is “merger repair.” Unfortunately, they are not alone. Numerous, well‐intentioned deals have gone sour either due to gross negligence or because of a series of small – but in aggregate very powerful – mistakes and/or delays. This article provides a method to identify whether or not a company is in need of “merger repair,” and an approach (including supporting tools and templates) to perform the needed “repairs.”

Design/methodology/approach
– In working with numerous clients on merger integration efforts we have identified that, not only do many companies struggle with their immediate M&A integration efforts, but they also suffer chronic performance issues caused by past integration efforts that have been allowed to linger and/or have been managed poorly.

Findings
– Conducting M&A integration efforts poorly creates lasting business performance issues (e.g. poor customer service, lower than desired productivity, lack of cost control, and/or unrealized revenue improvement) long after a deal is closed. Almost half (49 percent) of the respondents to The University of Dallas Graduate School Of Management's, 2006 Mergers and Acquisitions Survey – The Current State of M&A Integration (including 124 executives and managers from 21 different industries), indicated that their company is in need of “merger repair.” There are two key tracks of “merger repair” companies can pursue to first get the business back on track, and then to improve the organization's future M&A integration competency.

Originality/value
– This article advances the current theory and practice of post‐merger integration that, up to this point, has focused exclusively on integration activities conducted immediately (i.e. within the first 6 to 12‐months) of deal close. This article also addresses how to identify and address integration issues that still exist two or more years after a deal is closed, by providing pragmatic tools and templates that practitioners can immediately apply to both identify and resolve situations of “merger repair.” Lastly, the approach described has broad application to companies across multiple industries and geographies.

Item Type: Article
Keywords: Acquisitions and mergers, Integration, Strategy
Subject(s): Strategy
Date Deposited: 22 Sep 2017 14:59
Last Modified: 22 Sep 2017 14:59
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6515

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