] ACQUISITION LEARNING [ A COMPARISON OF ACQUISITION EXPERIENCE IN SIMILAR &

CULTURALLY/INSTITUTIONALLY DISSIMILAR ENVIRONMENTAL SETTINGS

Daniel Degischer MCI Management Center Innsbruck Lucas Huter SMA Research Lab Manuel Erlacher SMA Research Lab Florian Bauer MCI Management Center Innsbruck

Relevance of Mergers & Acquisitions

2.33 trillion USD 27,830 deals

Deal Volume 2013* Number of Deals 2013*

Picture credits: http://raumausstattung48.de/steuern-sparen/ *Bloomberg, 2013 2

Relevance of cross-border M&A

Deal Volume 2013 (cross-border only)

Number of Deals 2013 (cross-border only)

1.05 trillion USD 9,307 deals

45.2% 33.4%

Picture credits: http://raumausstattung48.de/steuern-sparen/ *Bloomberg, 2013 3

M&A – A success story?

Picture credits: http://www.freebievectors.com/de/abbildung/66687/coole-dreidimensionale-flamme-vektor-die-hohe-der-flamme/ *Bower, 2001; Cartwright & Schoenberg, 2006 4

M&A – A success story?

Picture credits: http://www.freebievectors.com/de/abbildung/66687/coole-dreidimensionale-flamme-vektor-die-hohe-der-flamme/ **Economist, 1999 *Christensen et al., 2011

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Performance

# of deals

Performance

# of deals

Performance

# of deals

Barkema, Bell & Pennings, 1996 Haleblian & Finkelstein, 1999 Uhlenbruck, Hitt & Semadini, 2006

Hayward, 2002 Zollo & Singh, 2004

Performance

# of deals

Performance

# of deals

No significant

relationship

Acquisition Learning

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Idiosyncracies of cross-border M&A

settings in cross-border M&A

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Research Gap

“Mergers and Acquisitions are still a puzzle for academics and

practitioners. Despite the considerable number of transactions carried out

so far, the acquiring firms´ performances are, on average, disappointing.”

(Capasso & Meglio, 2005)

“[…] we know very little about cross-border acquisitions, and yet their

number has been increasing in recent years.“ (Collins et al., 2009)

“[…] consistent findings on the relationship between acquisition experience

and postacquisition performance do not exist.“ (King et al., 2004)

“[…] a more systematic approach is needed to understand the learning mechanisms operative in complex cross-border M&As.” (Shimizu et al., 2004) ] [

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Model Development

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Sample description I/II

listed on Frankfurt Stock-Exchange

01/01/2007 until 01/01/2010

100% stock ownership

at least 2 acquisitions (serial acquirer)

completeness of data

sample size: 230 acquisitions

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Sample description II/II

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Overall Result

n=230

r²=0.022

ß=-0.148

p=0.025 perf

orm

ance

number of acquisitions

-0.148*

n = number of observations ß = beta coefficient, explaining the relationship between number of acquisitions (experience) and acquisition performance r² = coefficient of determination (quality of a model) p = statistical significance; n.s. = not significant; † p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

overall experience-performance relationship

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Refined Results

perf

orm

ance

number of acquisitions

0.102n.s. 0.365†

international diversification unrelated diversification

market penetration product diversification

ß=0.102 p=0.495

n=47 r²=0.010

ß=0.365 p=0.1

n=21 r²=0.133

BASA

AASA

perf

orm

ance

number of acquisitions

0.435** -0.308*

ß=0.435 p=0.01

n=34 r²=0.189

ß=-0.308 p=0.05

n=41 r²=0.095

BASA

AASA

perf

orm

ance

number of acquisitions

0.583** 0.699*

ß=0.583 p=0.01

n=18 r²=0.340

ß=0.699 p=0.036

n=9 r²=0.489

BASA

AASA

perf

orm

ance

number of acquisitions

0.488** -0.083n.s.

ß=0.488 p=0.007

n=29 r²=0.238

ß=-0.083 p=0.655

n=31 r²=0.007

BASA

AASA

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Implications

Different results for domestic and cross-border acquisitions.

Higher degree of complexity

in cross-border settings.

Institutional environment

Additional cultural layer

Assumption: In cross-border settings, an acquirer needs

more time between two deals to digest experiences from previous acquisitions.

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Limitations

] study focuses solely on German serial acquirer [

] relatively short study period [

] relatively small sample size for particular strategic intentions [

] share price as a performance measure [

] assumption that culture stops at national border [

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Discussion

Picture credits: http://www.wolf-pac.com/discussion

questions comments ideas

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Thank you!

Picture credits: http://www.abaenglish.com/blog/english-vocabulary-learn-english-with-aba/the-origin-of-please/ 17

] BACKUP [

SIC & Country code classification

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Acquirer Target SIC code

acquirer

SIC

code

target

Country

code

acquirer

Country

code

target

Diversification

strategy

Bechtle AG

ITZ GmbH

7371 ≠ 8748 GER = GER product

diversification

Bechtle AG Support EDV

Handels GmbH 7371 = 7379 GER ≠ AUT

international

diversification

Bechtle AG Coma Services

AG 7371 ≠ 4731 GER ≠ CH

unrelated

diversification

Bechtle AG

PSB AG 7371 = 7379 GER = GER market

penetration

Acquisition dispersion across acquirer

20

37

14

3 4 3 5

1 1 1 0

5

10

15

20

25

30

35

40

2 3 4 5 6 7 8 9 10 11

Num

ber o

f acq

uire

r

Number of acquisitions per acquirer

∑ 69 acquirer

Sample dispersion across regions I/II

21

180

29 17

2 2 0

20

40

60

80

100

120

140

160

180

200

Europe America Asia Australia Africa

Num

ber o

f acq

uisi

tions

∑ 230 acquisitions

Germ

any:

95

othe

rs: 8

5

Sample dispersion across regions II/II

22

domestic cross-border

95

15

70

50

0

10

20

30

40

50

60

70

80

90

100

GER AUT & CH Rest of Europe Rest of World

Num

ber o

f acq

uisi

tions

Year-end share prices

] accessible [

] comparable [

] guaranteed completeness of data [

23 Picture credits: http://www.keinhing.com/Share%20Price.html

Literature I/II

Barkema, H.G., Bell, J.H.J., & Pennings, J.M. (1996). Foreign entry, cultural barriers, and learning. Strategic Management Journal, 17, 151-166.

Bloomberg. (2013). Mergers & acquisitions rankings 2013. Retrieved from Bloomberg website: http://www.bloomberg.com/professional/content/uploads/sites/2/2014/01/M-and-A-2013.pdf

Bower, J.L. (2001). Not all M&As are alike – and that matters. Harvard Business Review, 79 (3), 93-101.

Capasso, A., & Meglio, O. (2005). Knowledge transfer in mergers and acquisitions: How frequent acquirers learn to manage the integration process. In A. Capasso, G.B. Dagnino & A. Lanza (Eds.), Strategic capabilities and knowledge transfer within and between organizations: New perspectives from acquisitions, networks, learning and evolution (pp. 199-225). Northampton: Edward Elgar.

Cartwright, S., & Schoenberg, R. (2006). Thirty years of mergers and acquisitions research: recent advances and future opportunities. British Journal of Management, 17, 1-5.

Christensen, C.M., Alton, R., Rising, C., & Waldeck, A. (2011). The new M&A playbook. Harvard Business Review, 89 (3), 48-57.

Collins, J.D., Holcomb, T.R., Certo, S.T., Hitt, M.A., & Lester, R.H. (2009). Learning by doing: Cross-border mergers and acquisitions. Journal of Business Research, 62, 1329-1334.

Economist (1999, Dec. 2). Faites vos jeux. The Economist. Retrieved from http://www.economist.com/node/264987

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Literature II/II

Haleblian, J., & Finkelstein, S. (1999). The influence of organizational acquisition experience on acquisition performance: A behavioral learning perspective. Administrative Science Quarterly, 44, 29-56.

Hayward, M.L.A. (2002). When do firms learn from their acquisition experience? Evidence from 1990-1995. Strategic Management Journal, 23, 21-39.

King, D.R., Dalton, D.R., Daily, C.M., & Covin, J.G. (2004). Meta-Analyses of post-acquisition performance: indications of unidentified moderators. Strategic Management Journal, 25, 187-200.

Shimizu, K., Hitt, M.A., Vaidyanath, D., & Pisano, V. (2004). Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future. Journal of International Management, 10, 307-353.

Uhlenbruck, K., Hitt, M.A., & Semadeni, M. (2006). Market value effects of acquisitions involving internet firms: A resource-based analysis. Strategic Management Journal, 27, 899-913.

Zollo, M., & Singh, H. (2004). Deliberate learning in corporate acquisitions: Post-acquisition strategies and integration capability in U.S. bank mergers. Strategic Management Journal, 25, 1233-1256.

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