‘M&As: why don’t people ever learn from the mistakes of others?
by William Richards
Over the years, mergers and acquisitions research has identified the importance of leadership and workplace learning as critical determinants of M&A activities and outcomes. However, surprisingly little systematic attention has been paid to conceptualising or studying the impact and effect of either leadership styles or learning on the success of M&As – either in the academic or in the practitioner literature (Cartwright and Cooper, 2001)
Although scholars and practitioners recognise that acquisitions frequently fail to live up to their potential (Larsson and Finkelstein, 1999), the ...view middle of the document...
Nevertheless, there is always plenty of mention of failures and ‘why didn’t they learn from others mistakes?’
Furthermore, in these writings, there is little or no direct mention of leadership where authors do talk about leadership, they tend to focus very specifically and prescriptively on actions that managers should take and what not to do without describing how and what needs those actions meet.
Longitudinal studies of M&As are still uncommon primarily because it is difficult to maintain representative sample sizes over time, particularly in circumstances when attrition rates are characteristically higher than usual. However, in a comparative study of three Australian University mergers over a seven year period, combining qualitative and quantitative research methods (Kavanagh & Ashkanasy, (2005), they present data that reinforces the importance of leadership and the benefits of adopting an incremental approach to change.
Organizations that are successful need solid, thoughtful and intelligent leadership in normal times. During major organizational transitions - such as when a merger occurs - the requirement for competent leadership moves from being highly valued to absolutely critical. The normative role of leadership post-negotiation and during integration is to do the following:
• Provide certainty and reassurance that this was the right transition to make.
• Model an optimistic and positive attitude.
• Deal with crises and staff resistance.
• Champion the process and focus on the mission.
• Acknowledge the emotions of staff, show concern for them, nurture them, and appreciate them.
• Engage in symbolic acts that demonstrate commitment to the process and respect for the individuals involved.
• Pursue new projects, initiatives, or planning processes that get people excited and focus them on the future.
• Help the board identify the organization's vision and direction.
• Bring cultures together.
• Make the difficult decisions, communicate them with certainty, and deal with the fall-out.
A review of the academic and practitioner literatures on M&A reveals that discussions of the primary determinants of M&A processes and outcomes rarely even mention leadership. Instead, when they do refer to leadership, they tend to focus exclusively on a highly rationalized notion of strategy development. As shown in Table 1, where the literature has identified key M&A factors, the treatment of leadership-related issues has remained narrow (“pay too much’’) or vague and indirect (“fall in love’’, integration is hard’’). Although they are not exhaustive, the two lists are representative and illustrate how M&A commentaries sometimes mention leadership, but largely neglect it. Furthermore, in these (and similar) writings, there is little or no direct mention of leadership and where authors do talk about leadership, they tend to focus very specifically and prescriptively on actions that managers should take,...