Due Diligence in Cross-Border M&As : Top Management Team's human capital affecting the speed of due diligence process

Master Thesis in Business Administration Title: Due Diligence in Cross-border M&As - Top management team´s human capital affecting speed of due diligence process Authors: Jürgen Sabernik and Matti Salakka Tutor: Tommaso Minola, Ph.D. Date: 2018-05-21 Key Terms: Mergers & Acquisitions, Due Diligence, Speed, Cross-border, Human Capital, Top Management Team Abstract Problem: Globalization and market saturation are a constant influence for all the participating businesses in the markets. Therefore, companies of all various sizes are considering mergers & acquisitions to either consolidate the market, use it as a market growth opportunity or entry strategy into a new market or even country. Due to these multidimensional processes, many of the attempted M&As fail. Practitioners tend to focus only on financial or legal characteristics when considering to acquire and afterwards merge the target company, which results into failed M&A process. Accordingly, multifaceted phenomena such as M&As should not be only assessed on two dimensions, they should rather be evaluated as a whole with a dynamic due diligence process along the M&A. Purpose: The purpose of this thesis is to investigate the speed of dynamic due diligence process in cross-border mergers and acquisitions and what effect the human capital of an organization’s top management has on it. Method: For this thesis, we utilize a qualitative research based on a multiple case study approach. Therefore, we investigated four case companies within different industries in the Finnish context. The primary empirical data was collected through semi-structured interviews with guidance from a topic guide, in addition we also used company information such as annual reports or the company websites as secondary data. The derived statements are based on the findings, which were categorized and afterwards adopted as a basis for the analysis. Findings: The findings of this thesis are that the human capital factors affect the speed of the due diligence process in cross-border mergers and acquisitions via four themes; (1) business environment, (2) market knowledge, (3) inter-organizational leadership and (4) individual skills. The themes can affect the speed directly, but more importantly through the interplay of different themes. Conclusion: In conjunction with various authors mentioned in this thesis, we also come to the conclusion that a dynamic due diligence process is contributional in order to grasp the multidimensionality of mergers & acquisitions. Additionally, the context where the individual M&A is happening is playing a major role within the evaluation process. Hence, top management team’s human capital has an impact on the speed of dynamic DD process in cross-border M&As via the four above mentioned themes