POST-ACQUISITION MANAGEMENT APPROACHES: AN EXPLORATORY STUDY

While most theory and research on acquisitions assumes the importance of how acquisitions are managed, little research has specifically addressed the topic of post-acquisition management. This study is intended as an exploratory attempt to address this problem by identifying the management approaches used by acquiring firms. Data on post-acquisition changes were collected from fifty-one firms, using structured questionnaires. Additional data were collected from senior acquiring firm executives through structured interviews. Management approaches were identified through nonhierarchical cluster analysis. Associations between management approaches and planning, outcome, and performance variables were identified using analysis of variance procedures. Results indicated four management approaches. The first was an autonomous approach, characterized by little change. The second was a decentralized approach, characterized by immediate structural and executive changes, coupled with a delegation of decision making to acquired firm managers. The third approach was characterized by centralization of decision making in acquiring firm managers, coupled with extensive structural and control changes. Finally, the fourth approach was bureaucratic, characterized by increases in rules, regulations, and controls, but few other changes. These four approaches can be seen as generic approaches to the problem of control versus delegation in new subsidiaries. Management approaches were strongly associated with acquisition outcome and performance variables. Specifically, extensive changes in acquired firms were associated with poor performance to objectives. Similarly, changes were positively associated with management conflicts, length of transition, and turnover. Management approaches were not strongly associated with pre-acquisition variables. These included the goals for which an acquisition was made, the formality of acquiring firm planning processes, and the concerns addressed by the acquiring firm in planning for transition. These results are somewhat consistent with views that stress the complexity of post-acquisition management processes, as well as their importance for acquisition performance. They also suggest that the interests of managers and workers in acquisitions both suggest similar management approaches. Improved prescriptions for post-acquisition management are possible, but they need to be less linear and more sensitive to the complexity of transitional processes