Acquisition Integration Approaches

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Mergers and Acquisitions. Explanation of Acquisition Integration Approaches of Philippe Haspeslagh and David Jemison. ('90)

Contents

  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

The Acquisition Integration Approaches model of Philippe Haspeslagh and David Jemison provides insight and guidance in Mergers and Acquisitions on choosing the optimal integration approach.


In Mergers and Acquisitions, the motto often traditionally was: "Make them like us". Or relatively simple criteria were used to choose an approach. Such as the size and quality of the acquired firm.


Haspeslagh and Jemison (1990) have stated that the approach, which a company should take towards integration, should be understood by considering two (additional) criteria:

  1. The need for strategic interdependenceM&A - Acquisition Integration Approaches.
  2. The need for organizational autonomy.

Four Types of value creation in Mergers and Acquisitions

Obviously, the goal and central task in any acquisition is to create the value that is enabled when the two organizations are combined. There are four types of value creation:

  1. Resource sharing. Value is created by combining the companies at the operating level.
  2. Functional skills transfer. Value is created by moving certain people or sharing information, knowledge and know-how.
  3. Transfer of general management skills. Value is created through improved insight, coordination or control.
  4. Combination benefits. Value is created by leveraging cash resources, by borrowing capacity, by increased purchasing power or by greater market power.

Organizational Autonomy

Haspeslagh and Jemison warn that managers must not lose sight of the fact that the strategic task of an acquisition is to create value. Furthermore they must not grant autonomy too quickly, although obviously people are important and should be treated fairly and with dignity. The need for organizational autonomy can be answered using three questions:

  1. Is autonomy essential to preserving the strategic capability we have bought?
  2. If the answer to question 1 is positive, how much autonomy should be allowed?
  3. In which specific areas is autonomy important?

The Preferred Mergers and Acquisitions model

Depending on the score on the above two factors (see graph), the preferred Acquisition Integration Approaches are:

  • Absorption. Management should be courageous to ensure that this vision for the acquisition is carried out.
  • Preservation. Management focus is: to keep the source of the acquired benefits intact, "nurturing".
  • Symbiosis. Management must ensure simultaneous boundary preservation and boundary permeability, gradual process.
  • Holding. No intention of integrating and value is created only by financial transfers, risk-sharing or general management capability.

Acquisition Integration Approaches Forum
  Combining Integration and Autonomy in Acquisitions
According to the literature on acquisitions, it is of high importance to decide on the proper level of integration between the firms in order to realize value from an acquisition. It is often considered that there is a trade-off between integratio...
     
 
  What HRM Theories are used in M&A?
What theories of HRM are usually applied in mergers and acquisitions?
How about configuration and contingency approaches? Thanks for your suggestions......
     
 
  2 Perspectives on Post-acquisition Integration
One can distinguish two perspectives when discussing acquisition integration:
1. Organizational Behavior Perspective towards Post-acquisition Integration (also called: 'Human Integration Perspective...
     
 
  What makes M&A So Attractive Compared to Organic Growth?
I think one reason for the low success rate of M&A is that many times the merger arises from opportunity and not from genuine strategic planning. Sometimes board members meet loosely, see some similarities and the idea is borne.
Seldom you see a...
     
 
  Mergers and Acquisitions in Africa
Mergers and acquisitions are not very common in Africa.... I wonder why?...
     
 
  Do Mergers and Acquisitions Add Value?
As a theory it is expected that the value of the two firms after merging should rise. But this is often not the case in real life. Why?...
     
 
  Mergers and Acquisitions (M&A) Success Factors
What are the factors affecting the success after a merger, acquisition or takeover?...
     
 
  Reasons for Mergers and Acquisitions?
Please help me understand why any company would want to merge with some another company. What are the typical main reasons behind mergers and acquisitions?...
     
 
  Da Annullamento and Da Concambio in English?
I'm writing a thesis degree on Italian and U.S. mergers. In Italy, mergers generate deficits ("Disavanzi") or surplus("Avanzi"). We have two types of these called "da annullamento" and "da concambio". The first one is generated due to the cancellatio...
     
 
  Global Number of Mergers & Acquisitions
How many company M&As are done annually across the globe?...
     
 
  The right Leader during M&A
The role of HR in M&A is important, but the role of the future Country or Regional Leader is critical. If that Leader is not "neutral", it is hard to have the right new and effective top management: this person can destroy the shared values....
     
 
  Culture Clashes in M&A
Many studies report that up to 80% of M&A are failing to create value and this is mainly due to culture clashes during the integration phase. Some authors have suggested that like financial and operational, a Cultural Due Diligence should be...
     
 
  Increase the role of HR in M&A
Many mergers and acquisitions fail to deliver on their initial promises partly because of cultural/people issues. The role of HR in M&A should be increased to avoid this, especially in early stages. In this way potential culture clashes can be...
     
 

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Expert Tips - Acquisition Integration Approaches Premium
 

Why M&A is not a Strategy

Note that M&A is just a tool to achieve something; it is not a strategy by itself. Some companies seem to be acquiring merely for the sake of top-line...
Usage (application): Mergers and Acquisitions Planning, Strategy
 
 
 

Mergers and Acquisitions: Success Archetypes

According to Marc Goedhart, Tim Koller, and David Wessels ("The Five Types of Successful Acquisitions", McKinsey Quarterly, July 2010), the strateg...
Usage (application): Mergers and Acquisitions, Strategy
 
 
 

Value Creation in Cross-Border Mergers and Acquisitions

There is a rise in the amount of cross-border mergers and acquisitions (M&As). These cross-border M&As are subject to a set of factors that affect ...
Usage (application): International M&A, Value Creation
 
 
 

Focus Areas after a Merger for Leaders

In McKinsey Quarterly 2006/4 is an article on the art of postmerger leadership. McKinsey mention 5 challenges for postmerger leaders:
1. Create a...
Usage (application): Post-merger Integration, M&A, Strategy
 
 
 

Rules for Successful Acquisition Campaigns

In his HBR article "Rules to Acquire By", Pitney Bowes' CFO and Executive VP Bruce Nolop shares some lessons learned by his organization during succes...
Usage (application): M&A, Strategy
 
 
 

Attributes of Success of Successful Acquisitions

In an empirical study of 24 acquisitions, Hitt, Harrison, Ireland and Best examined that successful acquisitions share following organizational attrib...
Usage (application): Strategy, M&A
 
 
 

What are the Key Responsibilities of the Board in M&A?

Cookson (iancookson@gt.com) recommends the following useful shopping list in the "Financial Excutive" of Oct2004:
- What are the integration pla...
Usage (application): Board Responsibilities, Mergers and Acquisitions
 
 
 

Potential Strategic Objectives of Mergers & Acquisitions

Many mergers and acquisitions are driven by strategies in order to achieve one of the following five strategic M&A objectives:
1. To exte...
Usage (application): Mergers & Acquisitions, Strategy
 
 
 

Platform and Bolt-on Acquisitions Types

When it comes to assess a potential acquisition, Pitney Bowes, famous for its successful acquisition strategies, applies different criteria according ...
Usage (application): M&A, Strategy
 
 
 

Communication Strategy Before, During and After a Merger

Of the many complex decisions that senior executives make before and during a merger, one is mandatory and critical but often given short shrift: the ...
Usage (application): Branding, Communication, M&A
 
 
 

Principles for Successful M&A integration

1. Use a personal touch: One of the most important elements of a successful M&A integration is clear and consistent communication with employees of bo...
Usage (application): Post-Merger Integration
 
 
 

The Relation Between “Organizational Fit” and Post-acquisition Integration Performance

The term “Organizational Fit” is an important aspect when considering the post-acquisition integration performance. The term refers to the degree of c...
Usage (application): M&A Strategy, Post-merger Integration
 
 
 

The Drivers of Merger Success

Many mergers fail. Everybody knows that. Marc J. Epstein thinks there are seven determinants of merger success:
1. strategic vision
...
Usage (application): Post-Merger Integration
 
 
 

Reasons for M&A Failures

Research from Hay Group and La Sorbonne University on European merger and acquisition operations of the last 3 years highlights 2 unusual failure caus...
Usage (application): Avoid these Mistakes in M&A…
 
 
 

Cold Hard Facts about Acquisitions

One should recognize some cold hard facts about mergers and acquisitions. In the book: The Complete Guide to Mergers and Acquisitions, the authors Tim...
Usage (application): When you're considering an acquisition…
 
 
 

Guidelines for a Smooth Post Merger Integration

In the article "The Ten Commandments Of Integrating an Acquisition" by Jess Varughese and Peter Bond (USBanker, July 2008), the authors use the...
Usage (application): Integrating an Acquisition
 
 

Resources - Acquisition Integration Approaches Premium

Mergers, Acquisitions & Corporate Control

This presentation is about corporate control and mergers and acquisitions, including the following sections:
1. What is Corporate Control?
2...
Usage (application): Corporate Control, Mergers and Acquisitions, Anti-takeover Measures, Synergies
 

Best Practices of Merger and Acquisition Integration

Large presentation on Merger and Acquisition Strategy and Implementation
1. Introduction
2. Counter-Intuitive Moves
3. Predictable Shoc...
Usage (application): Mergers and Acquisitions, Strategy, M&A, Integration
 

Organizational Learning in Acquiring Other Firms

Paper by Dima Leshchinskii and Maurizio Zollo studies empirically how post-acquisition decisions and learning from previous acquisition experience aff...
Usage (application): Acquisition Integration, Banking, Mergers, Post_Acquisition Integration, Learning
 

Global HRM in a Globalized World

Presentation that introduces the concept of international HRM. The presentation includes he following sections:
1. Introduction
2. Drivers f...
Usage (application): Globalization, Global Human Resource Management, International HRM
 

Acquisition Integration Approaches Diagram

Download and edit the 12manage PowerPoint model for limited personal, educational and business use. Republishing in intranets, websites, books, magaz...
Usage (application): Post Merger Integration
 

Strategic Dynamics of Acquisition Integration

Paper by Robert A. Burgelman and Webb McKinney introduces a conceptual framework that decomposes the overall acquisition integration process into four...
Usage (application): Integration Process, Integration Framework
 
 

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