Organizational factors in post-acquisition performance

A study is reported based on 31 acquisitions for which data have been obtained from executives in the acquired divisions as well as the corporate officers by structured interviews and questionnaires. The study shows a lack of relationship between the professed motives of acquisition and post-acquisition performance. It seems that the lure of quick profitable growth through acquisition does not often materialize regardless of motive. The level of integration between the acquired division and its parent is shown to affect performance measured in terms of sales, profit, return on investment, market share growth, innovation, and broadening of customer base. The post-acquisition performance is also dependent on a variety of other factors including the assistance accorded to the division by the corporate organization. Intensive communication between the acquired division and the other organizational units on technology, joint projects, etc. are key elements in sharing the strategic capabilities. Increased level of formalization in resource allocation and other management decision areas adversely affects performance.<
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