Chapter 4: Placing process factors along with contextual factors in merger and acquisition research
Mergers and acquisitions (M & A), which commonly necessitate major organizational changes in at least one firm, show a clear case in point of the intricate, intertwined nature of contextual factors surrounding business combinations and process factors characterizing the way in which such combinations are implemented. M & A involve consequential strategic decision-making in which many contextual factors play a role. Strategic planners focus their initial attention on preexisting characteristics of the two firms and attributes of the acquisition itself in order to determine which deals provide the best opportunities to achieve improved performance, enhance strategic positioning, and attain other value-creating benefits. These contextual factors in turn influence the process through which the operations of previously separate firms are subsequently integrated so that strategic benefits are actually realized. From a practical perspective, this link between contextual and process factors necessitates a tight cooperation between strategy planners and integration teams. Ed Liddy, Chairman and Chief Executive Officer of Allstate, stressed this cooperation when he explained that at “Allstate, we have an integration team that works hand-in-hand with our strategic-planning area. They’ll press the planners: ‘What’s the logic of this acquisition? . . . [W]hat processes do we have that we can transfer to the acquired company to bring it up to a level of performance that we’re comfortable with? What can we borrow from them that would help us?’” (Carey, 2001: 15).
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