Shaping M&A Deal Outcomes: From Failure to Enabling Better M&A Performance

Abstract

The M&A literature is broad and fragmented. It studies M&A success and failure from various disciplinary perspectives and examines M&A deal outcomes at separate stages of the M&A process. Despite the increase in M&A activity, M&A failure rates continue to be high throughout recent years. This dissertation comprises four separate studies which shed light on this issue. Paper I is a literature review in which I systematically analyze studies on M&A failure. The findings reveal three blind spots of the current M&A literature which need to be addressed. These are a) the need for clarity on the definition and operationalization of M&A failure, b) the need for more integration among disciplines, and c) the need to adopt a more processual perspective on M&A phases instead of a within-phase analysis. The consequent three papers are empirical studies which contribute to filling the identified research gaps. Paper II is a quantitative study on target pricing which takes different types of bidders into account. I conclude that more research is needed to understand the outperformance of private equity funds. As this stream of literature is in a nascent stage, I call for more qualitative and explorative research on the topic. In a consequent qualitative study, I explain M&A deal outcomes with regard to the private equity bidder type. In this study, three characteristics (i.e., organizational set-up, private equity investors’ professional identities, and an integrative work approach) are identified which were brought together into a theoretical framework that explains how private equity professionals can enable better M&A performance. The findings further underline the effectiveness of specific incentivization approaches applied in private equity funds. In the fourth study, the research focus is on the firm’s organizational culture, M&A teams, and individual professionals. Three prevailing team roles (i.e., project manager, expert and executor) are identified which require a specific set of soft and hard skills that explain how M&A teams can enable M&A success in terms of deal execution and completion. Furthermore, evidence to how aspects of project timing, such as deadlines and simultaneous projects, shape the team members’ work is provided. Finally, the findings underline the importance of accumulating experience and learning effects on M&A deal outcomes, shaping both the M&A team culture and the team members’ skill sets.