The acquisition of small high technology firms: A study of merger implementation.

Merger implementation presents a host of complex organizational and behavioral issues, the resolution of which can have a major impact on the overall success of a merger. The goal of this research is to enable managers to improve the performance of acquisitions through better selection of firms to acquire and better management of the integration process. This research builds "grounded theory" by documenting six merger cases based primarily on open-ended interviews with managers. The six cases in the study are mergers of small, high technology firms with very large corporate parents. Each of the three parent firms selected competes in the health care industry. Two merger cases were selected per parent, each representing a strategy of related diversification and meeting the criteria for relative size. The most striking finding from the cases is the critical role of the parent firm in explaining differences in merger implementation. While the three parent firms had similar intentions going into the mergers, over time differences emerged in their approach. The promise of autonomy was very hard to keep for parent firms with a high degree of centralization, strong staff orientation and low tolerance for diversity. While the actions of the parent firms did not have a measurable negative impact on short run performance, there was considerable speculation about the eventual impact on the acquired firms' level of innovation and responsiveness to the market. The second important finding is the crucial role of the parent firm in the realization of synergies. Leadership from the parent firm was surprisingly potent in unlocking the potential for synergies. and yet, there were many examples cited in the cases of failures to take decisive action, failures to provide common goals and vision, and failures to resolve conflicts between cooperating units. Once again characteristics of the parent firms were key to explaining the differences. The quality of leadership from senior and middle management, the firm's degree of commitment to attaining synergies and the firm's capacity for organizational learning helped to explain the firm's efforts to promote synergies.PhDManagementUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/162289/1/9001602.pd