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| Author: | Meyer, C.B. |
| Title: | Value leakages in mergers and acquisitions: why they occur and how they can be addressed |
| Journal: | Long Range Planning
2008 : APR, VOL. 41:2, p. 197-224 |
| Index terms: | mergers shareholder value integration managers |
| Language: | eng |
| Abstract: | On average, shareholders fail to benefit according to the aggregate evidence on merger and acquisition performance. This paper argues that an explanation for these disappointing results is the leakage of shareholder value in the post-merger integration processes. Shareholder value is attacked from two sides: 1) gains are reduced by internal stakeholders seeking rents at the expense of shareholders and 2) costs are increased as a result of reductions or reallocations of effort. It is only the first step to identify the different kinds of leakages of shareholder value, and more important is to examine what can be done to limit such leakages. This paper suggests several practical steps that organisations can take to resolve each of these leakages. Nonetheless, while a remedy may resolve the leakage of shareholder value in one area, the same remedy may have adverse affects on leakages in other areas: for managers, the challenge is to find the best way to manage the trade-offs. It is also discussed how the different leakages impact different types of M&As, and found that multiple M&As are the most challenging type for organisations to pursue. |
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