Explicación del formato para el perfil de competencias para puestos de trabajo

Generally, the domain of M&A has been studied extensively in the literature. These studies have mostly focused on the motives for M&A, factors influencing M&A, success of M&A, merger wave, and impacts of M&A on shareholders.

2.1.3.1 Reasons for and against M&A

As mentioned previously, the reasons and motives for M&A have been frequently discussed in the literature. M&A are a distinctive means for accessing external resources

(Wang and Zajac, 2007). The key motives include economies of scale, synergistic gains, better capacity utilisation, better market positioning, overcoming entry barriers, and achieving a wider market reach (Weston et al., 2004; Bruner, 2004; Hitt et al., 2001; Burkart and Panunzi, 2006). However, reasons against M&A can also be found in the literature. These are using excess cash flows for the transaction costs of M&A deals, managerial entrenchment (by which managers make deals to increase their value and power over shareholders but not to increase shareholder value), and managerial hubris or ego (managers’ overconfidence in making decisions on the deals) (Porrini, 2004, Vermeulen and Barkema, 2001, Bruner, 2004).

2.1.3.2 Factors for Successful M&A

M&A activities are becoming prevalent with globalisation. In view of the success rate and returns, influencing factors of M&A have received substantial research attention. Key factors include the prior M&A experience of the merger/acquirer (Nina, 2012; Emanuel et al., 2007), the relation between the businesses of the merger/acquirer and the target company (Bruner, 2002), the time to complete M&A deals, and business valuation. Highly educated managers with rich experience in M&A deals are more capable of evaluating and understanding complex business situations, making decisions, and managing corporate restructuring and integration. Experience also brings execution capabilities, which are critical to the M&A process (Meschi and Metais, 2006). Such managers can help companies choose suitable targets, establish priorities, as well as effectively work out the strategy and plan in terms of resources for the deal and post-M&A. The closeness of the businesses between the merger/acquirer and the target company is positively associated

with the success rate. Offering higher premiums could encourage and induce the target company to make the deal in an effective manner. If M&A negotiations last long without any outcome, this would probably lengthen the time to complete the M&A deal and thus lower the success rate, as disagreement is likely to prevail. Successful deals are commonly found in acquisitions of target companies with a lower market-to-book value (Rhodes- Kropfet al., 2003).

Among the factors influencing M&A, the time to complete M&A deals is critical, yet it has received limited research attention. Deal duration refers to the time from announcing the M&A to the closure of the M&A, either by completion or termination. The more complicated M&A deals are, the longer the time required to complete the deals. However, there are often deals which are abandoned or which take a very long time to be completed. The failure rate of M&A is around 50% (Schoenberg, 2006).

Time is decisive for a thorough M&A evaluation. It is crucial for firms to quickly weigh everything, particularly the strengths and weaknesses of the target company, for a better understanding of the target and then go through the process of due diligence. Poor evaluation with a lack of experience in M&A would probably result in overestimation of the returns or underestimation of the investment requirements. If the evaluation process in M&A lasts for a long time, the companies would probably miss the opportunity of making the M&A deal at the critical time (Emanuel et al., 2007).

2.1.3.3 Failure in M&A

There are many advantages of M&A, but the success and strategic objectives are not always guaranteed and substantial risk exists. M&A activity has been booming but it comes with a high chance of failure (Weber et al., 2012). M&A often lead to major corporate changes, brining two different companies together with uncertainties in terms of managerial compatibility, organisational structure, and cultural differences (Amiot et al., 2006; Lichtenstein and Brush, 2001; Weber and Camerer, 2003; Newbert, 2007; Sirmon et al., 2007; Chambers and Honeycutt, 2009). Incompatibility in thinking and working styles, attitude towards risks, decision-making approach, and communication patterns may increase conflicts and anxiety in the newly combined entity, thereby resulting in dissatisfying and poor post-M&A performance. Some of the important causes for M&A failure include mismatch in the size between the acquirer and the target company, poor strategic fit, poor organisational fit, overpaying, lack of M&A experience, poor cultural fit, incorrect assessment of the target’s value, incomplete or inadequate due diligence, poorly managed integration, inadequate attention to people issues, and a lack of proper communication (Chakravorty, 2012; Park et al., 2009).

Companies undergo M&A generally for the purpose of increasing shareholder value; nevertheless, the empirical studies in the literature have revealed that M&A deals consistently benefit the shareholders of the target companies but not those of the mergers/acquirers (Revenscraft and Scherer, 1989; Firth, 1990; Agrawal et al., 1992; Datta

et al., 1992). For example, through an empirical study, Datta et al. (1992) found that the shareholders of the target companies gained over 20% increase in value or wealth while

the acquiring companies earned nothing or suffered losses after M&A announcement. Firth (1990) further stated that the mergers/acquirers often have to suffer the losses if M&A fail. If an M&A deal is announced but fails, the stock price of the acquiring company is likely to fall. Ghosh (2001) found that the operating performance of the acquiring companies is not enhanced after M&A. Ali and Gupta (1999) specified that the acquiring companies became bigger but with reduced profit after M&A.