INTRODUCTION

A merger is an agreement that unites two existing companies into one new company. There
are several types of mergers and also several reasons why companies complete mergers.
Mergers and acquisitions are commonly done to expand a company’s reach, expand into new
segments, or gain market share. All of these are done to increase shareholder value.
Corporations reorganize and restructure for various reasons and in numerous ways.
The bottom line usually is, well, the bottom line. Companies reorganize to increase profits
and improve efficiency. The reorganization of a company typically addresses the efficiency
component in an attempt to increase profits. It’s not unusual for a corporation to reorganize
on the heels of changes at the top. A new CEO often sees reorganization as a cure for a
company’s ills, and companies sometimes hire a new leader based specifically on his vision
for reorganization.

CONCEPTS ON MERGERS AND ACQUISITIONS

Merger and acquisitions are distinguished by the integration or not operations, after the
process is complete. In the case of a merger, there is a complete integration of the two firms,
control may be exercised more easily - since it involves a higher level of control - which does
not occur in the acquisition, which may be partial or total. Acquisitions are most appropriate
when there are operational, geographic and legal reasons to maintain the corporate structures
separate, partially or completely.
For Larsson and Finkelste in 1999, the synergies obtained by the company or
resulting business configuration and how they relate to the company's performance is what
translates the success of M&A. Thus, synergistic benefits are related to the strategic potential
of the combination, the degree of organizational integration after the deal has been completed
and the low resistance of employees to the integration of joining firms. They involve the
effective combination of organizational capabilities. And from most of the M&A, it is
expected to achieve significant synergies from economies of scale, rationalization of facilities
and industrial plants and the elimination of legacy systems, but they all have in common the
fact that they mainly require changes in IT. Activities related to IT are usually the items of
higher.1
1
Relevant Factors in The Post-Merger Systems Integration and Information Technology in Brazilian Banks,
available at
http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1808-23862017000200160 (Last Modified on
20.02.2021)
WHAT IS POST MERGER REORGANIZATION
Post-merger reorganization is the wide term that covers the reorganization of each & every
aspect of the company’s functional areas to achieve objectives planned & aimed at.
Parameters of post-merger reorganization are to be established by the management team of
each amalgamating company differently depending upon its requirements, objectives of the
merger & the management corporate policy.
Corporate reorganization normally occurs following new acquisitions, buyouts, takeovers,
other forms of new ownership, or the threat or filing of bankruptcy, according to the Thinking
Manager's approach. The VC Experts website reports that reorganizations involve major
changes in a corporation’s equity base, such as converting outstanding shares to common
stock or a reverse split – combining a company’s outstanding shares into fewer shares.
Reorganizations often occur when companies already have attempted new venture financing
but failed to increase company value.
Reorganization is an important part of a merger or acquisition integration process
and should be done properly to ensure a shared vision and a smooth transition in the desired
timeframe. Unfortunately, research shows that it is not uncommon for this process to take
longer than expected because the integration plan was not appropriately focused on the
culture, the people, the leadership, and the ultimate goals. Business leaders that employ a
solid integration strategy during M&A are more likely to achieve their desired outcomes.

FACTORS AFFECTING POST MERGER REORGANIZATION

Recognizing the importance of mergers in the success of a company, it is important to discuss
some critical aspects that should be taken into account in the integration stage of a Merge &
Acquisitions deal:
● Focus on people and their incentives
● Integrate selectively
● Do not delay decisions and communicate clearly the new rules

Suppressing competition with coordination and control may not be a win-win proposition
after all. Constant innovation and adaptation are critical for the long-term survival of an
organization. Without competition- the fear to fall behind — there is not much rationale for
constant re-invention.
CHALLENGES TO POST MERGER INTEGRATION

● Maintaining Momentum- The issue which underpins all integration challenges in

mergers is maintaining momentum. While carefully addressing each of the integration
issues which follow, it’s all too easy to overlook the day-to-day operations of the
company. The integration effort has to happen in addition to ‘business as normal’, not
instead of it.

● Employee Engagement- Every list of the integration problems in mergers and

acquisitions begins with ‘people’ or ‘employees’ and how to engage them as part of
the integration process. In some cases, companies are lucky when the human resource
issues that they encounter after a merger or acquisition double. More frequently, they
multiply.

● Senior Management Issues - Managers are often no more immune to challenges

brought about by M&A than their junior colleagues. A big difference is the extent of
the impact that an underperforming manager can have: if they don’t quickly get up to
speed in their new role, it’s possible that a range of other problems will soon be added
to your post merger integration challenges.

● Synergy Implementation-One of the most commonly cited motivations for

performing M&A is the ability to achieve synergies. Unfortunately, most synergies go
up in smoke because they’ve been over-optimistically estimated since their
conception. But even those that do make sense have a tendency of disappearing as
soon as the integration process begins.

● Communication Challenges - Just as with ‘maintaining momentum’ at the beginning

of this list, communication is something that flows through the whole integration
process. As such, communication challenges - be those internal or external - can
hinder the success of an integration. If people don’t know what’s happening, it’s not
just that they won’t engage with the integration, it’s that they can’t.2

2
PATEL,KISON The Ultimate Guide to Post Merger (M&A) Integration Process, available at
https://dealroom.net/blog/biggest-post-merger-integration-challenges (Last Modified on 20.02.2021)
EXAMPLE OF CULTURAL FACTOR OF POST MERGER
Hindustan Lever Ltd. & Tomco merger case, HLL has been known for its result oriented,
systems-driven work environment, where a strong emphasis is placed on performance.
Accordingly, it always has & strives for the team of the high performing & high profile
executives, carefully selected from best management institutes. Discussing the product
profitability & target achievement is the only language that its managers understand. The
work culture is very demanding and only the best survive. In fact, about hundred managers at
that time for Unilever Group Company had quit their jobs, as they were not able to cope with
demanding work culture. It was felt that the more difficult part would be a manager of the 2
totally different work cultures & ethos, after the merger. In TOMCO the employee
productivity was only 60% of HLL. It was opined that HLL would have to rationalize
TOMCO’s workforce. HLL itself had launched a voluntary retirement package, in order to
get rid of about 500 workers, however only a few resigned. However, TOMCO employees
had been assured that their employment conditions were to be protected and service
conditions would be honored. All the employees of TOMCO were to be absorbed as HLL
employees.3

STRATEGIC INDEPENDENCE AND AUTONOMY

Autonomy in an acquisition by definition is the day-to-day freedom to make decisions rather
independently without the parent firm's intensive involvement but at the same time to keep a
close and respective cooperation for the sake of post-acquisition objectives. Autonomy
encourages people to be more responsible and do more meaningful work, as through it the
needs for higher order of human beings, e.g. in terms of power and freedom, can be met.
In the model the vertical dimension represents autonomy granted to the acquired firms. The
horizontal dimension shows the strategic interdependence expected between acquirers and
acquired firms are as follows:
● Preservation - Acquirers keep the acquired firms intact, high autonomy is granted
and resources are provided if needed

3
Kumar,Narendra What is Post Merger Reorganization, available at
https://enterslice.com/learning/post-merger-reorganization/#:~:text=Post%2Dmerger%20reorganization%20is%
20the,achieve%20objectives%20planned%20%26%20aimed%20at (Last Modified on 20.02.2021)
 ● Symbiosis - Acquirers must simultaneously ensure boundary preservation and
boundary permeability. Target firms enjoy a certain degree of autonomy. Integration is
a gradual process
● Absorption - Acquirers dissolve the boundary between the two firms, assimilate
acquired firms into their own operating system, totally consolidate the operation of
the two firms and apply high level integration and low autonomy for the target firms
integration speed is high
● Holding - acquirers have no intention to integrate and value creation is achieved
through financial transfer, application of general management skills or risk sharing.4

DIMENSIONS OF MERGER INTEGRATION STRATEGY

The model of Haspeslagh offers two dimensions for determining the integration type:
Strategic interdependence and Need for organizational autonomy. Strategic interdependence
relates to value creation from sharing of resources, from transfer of functional skills or
management skills and from combination benefits. The need for organizational autonomy
describes the reasoning behind leaving the targets or parts of the target organization
autonomous. So we have to answer questions like:
● "Is autonomy preservation essential to reach acquisition goals and objectives?"
● "How much autonomy should the target still have post integration?"
● "What are the specific areas of autonomy of the target?"

Organizational Autonomy, a central concept of organizational fit, is concerned with the extent
to which an organization’s culture is maintained or dissolved. Where a cultural boundary is
disrupted through loss of autonomy, there is a negative impact on organizational culture and
embedded strategic capabilities—a target’s routines and processes can be undermined by a
lack of post-acquisition autonomy . It is important therefore to allow a level of autonomy in
terms of target discretion over decision-making, particularly when new and unfamiliar
resources are brought to the acquiring firm . Maintaining organizational autonomy minimizes
acquired firm disruption and allows tolerance for multiculturalism, as an acquired firm can
continue with its own culture, which may be quite different from that of the acquirer.

4
Balancing Integration and Autonomy in the Post-acquisition Phase- A study of German firms acquired by
Chinese firms, available at
https://www.diva-portal.org/smash/get/diva2:823895/FULLTEXT01.pdf (Last Modified on 20.02.2021)
These two dimensions create a framework, in which Haspeslagh and Jemison observe
empirically three distinct primary post-acquisition integration strategies: "Preservation"
acquired companies require high levels of autonomy and low strategic interdependence to
maintain their sources of benefit."Absorption" acquired firms require low levels of autonomy
and high levels of strategic interdependence. The boundaries between the firms are dissolved,
and operations, organization and culture are fully consolidated into the parent firm
"Symbiotic" acquisitions acquired firms require both high strategic interdependence and high
organizational autonomy to enable co-existence. Both firms become increasingly susceptible
to a broad range of interactions as inter-firm boundaries dissolve.5

INTEGRATION OF BUSINESSES AND OPERATION

The process of combining two or more organizations into a single organization involves
several organizational systems, such as assets, people, resources, tasks, and the supporting
information technology.The process of combining these systems is known as 'integration'.
Integration Planning is one of the most challenging areas to address pre-close during a merger
or acquisition.Even though culture clash between companies can cause integration problems,
only 4% of the executives in a survey by Pritchett, LP reported that their organizations
include culture-specific questions in their due diligence checklists.Culture specific due
diligence may include cultural screening and creating a cultural profile of the target firm. GE
Capital conducts a cultural assessment of prospective candidates against metrics such as trust
in existing managers, language barriers, and operating processes to then facilitate a culture
work out session between both sides.6

RESPONSIBILITIES OF POST MERGER INTEGRATION

● Top Executives & Stakeholders

One of the top post merger success factors is placing value around merger from the
top down. At the commencement of the M&A process, a company’s executives
should gather all of the potential stakeholders involved in a deal’s due diligence

5
New Integration Strategies for Post-Acquisition Management ,available at
https://eprints.lancs.ac.uk/id/eprint/76263/2/12LRP1105_Angwin_MH2_DA.pdf (Last Modified on 20.02.2021)
6
The 5 Critical Elements of an M&A Integration Plan" available at
https://www.mergerintegration.com/strategy-planning/post-merger-integration-plan-merging-businesses (Last
Modified at 20.02.1997)
 process — bankers, lawyers, consultants, etc. And begin communicating from the
start about the details of the post-merger integration.
Better yet, each and every communication in the diligence phase during m&a
integration should also have an eye on the post deal integration period.

● Diligence Team Members

Post-merger integration best practices prove that the people doing diligence should
become part of the team in order to retain and revise information without redoing
work or engaging in redundant tasks. When using the same individuals for diligence
and integration, there is continuity, which is invaluable during the often chaotic time
of deal closing and post acquisition integration. The benefits of this continuity are
numerous.

Consider, for instance, the time it would take for the diligence team members to do a
full data transfer to the team. Would every bit of information really get transfered?
What about the overlooked notes on notepads that do not get passed on? Clearly, even
the best intended data hand-offs would end with some gaps and oversights.
In addition, let’s say that in the best case scenario all of the information from the
diligence team does get to the integration team - will the members really go over all of
this work? Most likely not because they will be under the gun and strapped for time,
which, again, will result in gaps of knowledge and oversights.

Consequently, the best, and the most efficient, way of integrating is to have overlap
between the diligence and the integration team. This model also increases the
likelihood that the team will maintain its momentum and capture synergies, or “low
hanging fruit,” of the deal that are found within the first 120 days, thus making it a
key M&A integration strategy.

● Human Resources
More and more M&A practitioners are understanding the importance of m&a
integration planning, but operations (even those at major acquirers) still often miss the
mark because the all too important “people” factor can get lost in the shuffle of
modern business life. This misstep can lead to loss of employees and clients during
 the very critical early days of integration when competitors tend to go after both
employees and clients of the target company.
With this in mind, practitioners need to be ready to execute and communicate on day
one important information about targets, employees’ positions and benefits, and the
future of the company - obviously Human Resources plays a vital role in the “human”
piece of integration.

● A Change Management Expert

HR cannot do it all, however; your acquisition transition plan will not be successful if
it doesn’t take into account change management. The first rule related to change
management best practices is to make change management its own role.7

Some of the benefits of having a change management expert on your PMI M&A team are: the
buyer gains valuable information about the target company, the target company feels cared
for and employee morale/buy-in improves, and secrets are revealed all of which will help
avoid major and costly problems.
One final note when it comes to putting together a M&A integration team and
acquisition merger plan: when selecting a leader, recommendations should come from
members of the diligence team - remember, strong practices and the valuing of post
acquisition integration comes from the top-down.8

AREA WISE TYPES OF POST MERGER INTEGRATION

● Data and Knowledge - This area includes a plan on how to integrate knowledge such
as customer, product, and services data.

7
PATEL KISON The Ultimate Guide to Post Merger (M&A) Integration Process, available at
https://dealroom.net/faq/post-merger-and-acquisition-m-a-integration-process#:~:text=M%26A%20integration%
20or%20Post%2Dmerger,up%20to%20its%20predicted%20value. (Last Modified on 20.02.2021)

8
Aleixo,Jeff ,What Are Key Steps in a Successful Post-Merger Integration, available at
https://emptech.com/successful-post-merger-integration/ (Last Modified on 20.02.201)
 ● Technology and Systems - Integrating companies need a strategy for combining their
technology and systems. For example, if both companies use different CRMS, which
CRM will they use in the future?

● Internal Policies - How will the two integrating companies handle internal policies
such as new employee training, salary changes, employee exits etc. ?

● Business Procedures - This area includes the strategy behind future business
operations such as sourcing new business and future mergers.

● Company Culture - Company culture is the backbone of any business. If one

company is from 8 AM - 5 PM Monday through Friday, and the other company has
flexible hours and work from home days, there are sure to be clashes. Before m&a
integration is complete, the two companies need to decide on the company culture that
will emerge post close.

● Organizational Structures - This area includes organizing department structures. For

example, will the two human resources departments become one, or will each one
take on different responsibilities?

● Products and Services - Before the companies integrated, they each had their own
set of products and services. They will need to decide whether to continue, combine,
or eliminate the products and/or services offered, as well as the branding associated
with them.

TYPES OF POST MERGER INTEGRATION

There are four typical types of post acquisition integration:
● Absorption - is when the acquiring company completely absorbs the target, including
all processes, organizations, and procedures.
● Symbiosis - only occurs in certain areas to help meet the goals of the merger or
acquisition.
● Preservation - The target company is mostly kept at self-governing, however, some
integration may occur with financial information.
 ● Holding - This is when the acquiring company holds ownership of the target
company, but they don’t integrate with each other.

MERGER AND ACQUISITION INTEGRATION PROCESS

The post-merger integration process is greatly affected by the planning, or lack thereof, that
takes place at the start of the deal’s lifecycle. Here is an outline of the process - to aid you in
your M&A integration plan:

● M&A Integration planning must begin at the beginning of the deal and goals need to
be re-evaluated regularly throughout integration. Teams are also assembled around
aligned cross functional goals. This enables everyone to have a big picture view and
eliminate common cross functional dependency issues.

● A kick off meeting should be held at the commencement of the deal. At this meeting,
a list of people to be included in this phase must be generated. During this stage it is
critical to clarify governance and determine the operating post merger integration
framework for how teams will work together, such as setting up meetings, managing
dependencies, and sharing info.

● While due diligence is not historically categorized as a part of PMI, successful m&a
integrations keep a sharp eye during diligence. Tools such as DealRoom’s m&a
software, help companies plan for PMI before the deal closes.

● Pre-close (again not technically part of PMI, but essential to a positive outcome) -
synergies should be reviewed and confirmed and teams and team leaders should be
established.

● Teams review and evaluate the post acquisition integration throughout constant short
iterations. This makes it easier to realign a team and their goals as new information
arises.9

ASSESSING ACCOMPLISHMENT OF POST MERGER

OBJECTIVES

9
PATEL KISON The Ultimate Guide to Post Merger (M&A) Integration Process, available at
https://dealroom.net/faq/post-merger-and-acquisition-m-a-integration-process (Last Modified on 20.02.2021)
When two firms in the same industry merge, they gain a larger share of the market, which
means they decrease their competition and so can raise prices. The government regulates
mergers in order to prevent a monopoly, which is when one company owns the entire market
for a single product. In the business world, a merger is when two firms join together to create
a single firm, with a new name and new stock. The assets of both are pooled, while the old
owners continue together as new owners. The ultimate goal is always increased profitability
and stability for both firms, which can be gained through a merger in different ways.

● Market Share - When two firms in the same industry merge, they gain a larger share
of the market, which means they decrease their competition and so can raise prices.
The government regulates mergers in order to prevent a monopoly, which is when one
company owns the entire market for a single product. Such a company can set almost
any price it wants on its product. Competition, on the other hand, drives companies to
lower prices and improve services in order to gain customers, but it can reduce their
profitability as well.

● Cost Reductions - Just like you can get a lower price per item by buying in bulk, a
single large business operates with lower average costs than multiple small
businesses. This concept is called economies of scale. The larger the scale of the
operation, the more economic it becomes, when factored in terms of per product or
employee. Two similar companies may merge for that specific reason, so that by
working together, they can both reduce their expenses.

● Security - For smaller companies, a merger with an industry giant represents security
against failure. A large corporation has the financial resources to ride out market
storms or handle expensive lawsuits, whereas a small business might go bankrupt on
its own. While the large firm gains new ideas and talent, the small one gains a
ready-made support structure and the prestige of a well-known and highly respected
industry brand name. Two moderate-sized firms might consider that their combined
resources represent greater security to both of them.

● Talent Sharing - Two firms might have different areas of expertise or strength that
can complement each other. One company, for instance, might be particularly good at
administration and cost cutting, while the other might be better at marketing or
 creating new ideas. Combining the two has the potential to create a business with both
strengths that will be much more profitable than either of them alone. A firm with an
exciting new product but no ability to market it is doomed, while one with great
marketing strategy but no product is likewise doomed. Put them together, and you can
have both product and marketing.10

POST MERGER EFFICIENCY

In today’s globalised economy, mergers and acquisitions activity has gained importance
caused by intensifying competition liberalization and globalization, integration of
national and international markets. The aim of this paper is to study the impact of merger on
the financial performance of merging companies by examining some pre- merger and post-
merger financial ratios. The sample consists of 9 BSE listed companies of the metal industry
involved in mergers during the year 2009-10. Paired sample t-test is carried out to assess the
difference in performance between post-merger and pre-merger periods. The findings showed
a marginal but not significant improvement in case of liquidity and leverage but the
profitability results showed significant decline in RONW and ROA which are contrary to our
hypothesis. The results of this study suggest that in case of M&A, synergy can be generated
in the long run with the careful usage of the resources. The success of M&A deals depends on
the post integration process, timely action and to keep check on the costs of the integration
process.

POST MERGER SUCCESS AND VALUATION

Every merger is not successful. The factors which help measure the success of any merger are
briefly discussed below:

● Whether the merged company yields larger net profit than before or a higher return on
total funds employed or the merged company is able to sustain the increase in
earnings.

● The capitalization of the merged company determines its success or failure. Similarly,
dividend rate and payouts also determine its success or failure.

10
Fitzgerald,Helen, Objectives of a Merger, available at
https://bizfluent.com/info-8444143-advantages-disadvantages-horizontal-integration.html (Last Modified on
21.02.2021)
 ● Whether merged company is creating a larger business organization which survives
and provides a basis for growth

● In some mergers, there is not only an increase in the size of the merged or
amalgamated company in regard to capital base and market segments but also in its
sources and resources which enable it to optimize its end earnings.

● In addition to the above factors, a more specific consideration is required to be given

to factors like improved debtors realization, reduction in non-performing assets, an
improvement due to economies of large-scale production and application of superior
management in sources and resources available relating to finance, labor and
materials.

MEASURING MERGER AND ACQUISITION SUCCESS FOR BEST CORPORATE

SUCCESS
If research evidence highlights the complexity of measuring M&A performance, what can we
can learn from corporate experience as regards tracking M&A success :
● Success metrics to fit the deal’s strategic rationale. A first key to success is
knowing what to buy and for what reason. As a result, defining M&A success
revolves largely around understanding the strategic rationale for the transaction, and
then identifying metrics to measure progress. Depending on the timing, industry, and
context of the transaction, strategic rationales will differ. We provide one way of
categorising M&A types below; as each transaction type is different, it follows that
measuring performance in each deal type follows a divergent logic:

a. A geographic merger is essentially a “land grab”, enlarging the purchasing

firm’s customer base with a new set of customers. As the aim is to increase
sales, in these deals one of the main metrics is increased sales revenue.
Depending on the purchasing firm’s organisational set-up, increased sales can
result in increased profits. In order to set up the right metrics to measure the
success of this deal type, a question to look at is: “is the customer-facing
organisation run on a revenue or profit basis?”

b. In purchasing a new technology or a new product, one aim is to increase sales

of the new technology by ensuring its access to the purchasing firm’s sales
channels. In this deal type, sales may ramp up much more slowly than in a
geographic merger. Still, this is a growth-oriented deal, aimed at rapid revenue
increase. An additional aim in a technology transaction is combining both
firms’ technological know-how, eg in joint research and development projects.
A viable success metric reflects the speed at which jointly developed products
come to market.

c. In purchasing customers, the logic is in many ways similar to the geographic

merger with the difference that, in this case, the firms’ customer bases reside
in the same geographical area. There are two options for this deal type:

d. The purchasing and target firms’ customer bases are overlapping. The aim is
to increase sales. The challenge is to avoid losing customers that are sourcing
from both firms, and to ensure that the overall customer base is properly
served. What service levels and product quality will be sought? The success
metric fitting this deal type is monitoring revenue and profit as well as product
quality, service levels, product returns, and customer complaints. The latter
metrics provide early warning signs as regards meeting sales targets.
e. The merger enables the purchasing firm to enter a new sector. Success metrics
to use are sales, revenue, and/or profit. Numbers of customer contacts can be
used to predict future sales levels. As the aim in the deal is not only to learn
about the new markets, but also to start cross-selling products between the
firm’s current and new markets, also new product development (NPD), or
ideas for NPD can be tracked.

f. In the classic overlap merger, the aim is both to cut costs and to generate
revenue. This dual target makes this deal type the most difficult of all. To
ensure success, the purchasing firm needs to be well aware of the strategy
guiding its action. As regards metrics:

g. To deliver on cost cutting, both firms need to be analysed from an efficiency

perspective. The aim is thereafter to monitor the cost cutting exercise as
minutely as possible. Also, the amount of money invested in the change or
efficiency projects themselves is tracked. Third, the increase in profit and
progress on hitting set P&L targets need to be monitored. Possible double
counting of synergy savings should be avoided.

h. To deliver on the growth side of this merger, as in the above deal types, sales,
revenue, profit, and increases in margin will be monitored. Also innovation
levels, ie NPD, potentially leading to a larger product range and thus increased
sales, need to be tracked.

i. In a reverse takeover, the same metrics as in the other deal types apply. The
key issue in this deal type revolves around management control, as the
purchasing firm is effectively taking over, yet the target is larger in size. This
leads to considerations around which side is in control, what changes will be
sought, and how these improvements will be delivered. Success measurement
will depend on the targets set and the roles of the parties involved in the
transaction.

j. In service sector deals, any of the above deal types can apply, as the purchase
revolves around a service rather than a product company. Thus, the same
 metrics as above will be pursued. However, additional indicators of progress
will be relevant. Thus, when purchasing, eg a consultancy firm, indicators
such as absenteeism (ie early warning signal of high stress levels, poor
productivity, or employees looking for alternative jobs) and retention levels
will prove useful in predicting future sales, as any loss in (senior) talent is
likely to result in lost customer contacts.

● Defining achievable metrics. In order to measure M&A performance and to

ultimately report success, performance metrics need to be defined in a way that makes
them measurable and achievable. Depending on the strategic rationale guiding the
deal, the question is — what are measurable and achievable metrics that allow
tracking progress? Further, what metrics can be clearly communicated to both internal
and external company audiences?
Selecting the time frame. In measuring M&A performance and defining M&A
success, a relevant issue is selecting the appropriate time frame against which
progress and performance can be tracked. Depending on the strategic rationale
guiding the deal, the degrees of integration sought following the transaction, the size
of the involved firms, the speed at which integration is initiated, and the quality of
integration management, results can be expected sooner or later. For example in
small-sized deals with little integration, business goes on as usual; hence timing of
“success” is not an issue and in medium-to-large sized deals involving significant
integration, results can be expected in the months to years post-deal, depending on the
set targets and the speed of integration.11

CONCLUSION
One of the limitations is that we did not make a standardized measurement for post
acquisition performance. Some acquisitions firms think the acquisition has not yet generated
direct economic benefits, but they are happy about the situation. Some other firms say that
they have strong roots in another continent after acquisition. Such non-standardized
measurement probably could not comprehensively represent the reality.

11
Defining mergers and acquisition success — caveats and best practices, available at
https://app.croneri.co.uk/strategic-briefings/defining-mergers-and-acquisition-success-caveats-and-best-practice
s#:~:text=Commonly%2Dused%20measures%20include%20the,managers'%20subjective%20assessments%20o
f%20performance (Last Modified on 21.02.2021).
It is to be noted that significant deteriorations in the profitability of the acquirers, reinforcing
the results of previous studies in other industries. It is thought strange that none of the
enterprise valuation ratios were found to be statistically significant. Meaning that the M&A
activity was not perceived by the investor community as a very “positive” decision. We
believe that this area needs further investigation since these events are very costly
investments for the acquirers and the implications of those are still not well defined. In the
maritime transport industry, future research should also consider the method utilized for the
acquisition, as well as, the “state” of the industry at the time of the acquisitions as a potential
factor influencing the success or failure of the acquisition.

Despite the goal of performance improvement, results from mergers and acquisitions
are often disappointing compared with results predicted or expected. Numerous empirical
studies show high failure rates of M&A deals. Studies are mostly focused on individual
determinants. A book by Thomas Straub "Reasons for frequent failure in Mergers and
Acquisitions"develops a comprehensive research framework that bridges different
perspectives and promotes an understanding of factors underlying M&A performance in
business research and scholarship. The study should help managers in the decision making
process. The first important step towards this objective is the development of a common
frame of reference that spans conflicting theoretical assumptions from different perspectives.
On this basis, a comprehensive framework is proposed with which to understand the origins
of M&A performance better and address the problem of fragmentation by integrating the
most important competing perspectives in respect of studies on M&A. Furthermore,
according to the existing literature, relevant determinants of firm performance are derived
from each dimension of the model. For the dimension strategic management, the six strategic
variables: market similarity, market complementarities, production operation similarity,
production operation complementarities, market power, and purchasing power were identified
as having an important effect on M&A performance. For the dimension organizational
behavior, the variables acquisition experience, relative size, and cultural differences were
found to be important. Finally, relevant determinants of M&A performance from the financial
field were acquisition premium, bidding process, and due diligence. Three different ways in
order to best measure post M&A performance are recognized: synergy realization, absolute
performance, and finally relative performance.
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