Dublin Business School & Liverpool John Moores University Post-Merger Integration Achieving Success in M&A MBA in Finance Dissertation submitted in part fulfilment of the requirements for the degree of Masters of Business Administration (M.B.A) at the Dublin Business School and Liverpool John Moores University. Submitted by: Sebastian Schmidt Student ID: 1714588 Supervisor: Mr Enda Murphy Word count: 21284 words Submission date: 10th May 2013 I Table of contents DECLARATION ...................................................................................................................... 1 ACKNOWLEDGMENTS ....................................................................................................... 2 ABSTRACT .............................................................................................................................. 3 LIST OF FIGURE .................................................................................................................... 4 LIST OF TABLES ................................................................................................................... 4 CHAPTER 1 - INTRODUCTION .......................................................................................... 5 1. The merger and acquisition market ................................................................................................................ 5 2. Background of the Issue ................................................................................................................................... 6 3. Research aim ..................................................................................................................................................... 9 4. Research objective ........................................................................................................................................... 10 5. Approach to the dissertation .......................................................................................................................... 11 6. Suitability of the researcher and interest in the subject .............................................................................. 11 7. Scope and limitations of the research ............................................................................................................ 12 7.1 Scope .......................................................................................................................................................... 12 7.2 Limitation ................................................................................................................................................... 12 8. Organisation of the dissertation ..................................................................................................................... 13 CHAPTER 2 - LITERATURE REVIEW:........................................................................... 15 I 1. Fundamentals for this study ........................................................................................................................... 15 1.1 The term M&A ........................................................................................................................................... 15 1.2 M&A forms ................................................................................................................................................ 16 1.3 The M&A industry ..................................................................................................................................... 18 1.4 M&A in Germany ...................................................................................................................................... 20 1.5 The strategic decision of mergers and acquisitions .................................................................................... 20 1.6 Different Phases of M&A ........................................................................................................................... 22 1.7 Culture ........................................................................................................................................................ 23 1.7.1 Definition culture ................................................................................................................................ 23 1.7.2 Definition corporate culture ................................................................................................................ 24 1.7.3 Corporate Culture as a success factor ................................................................................................. 24 2. Synergies .......................................................................................................................................................... 26 2.1 The term synergies ..................................................................................................................................... 26 2.2 Fundamentals according to Ansoff ............................................................................................................. 27 2.3 Synergy Potentials through M&A .............................................................................................................. 28 3. Post Merger Integration (PMI) ...................................................................................................................... 30 3.1 Integration – A definition ........................................................................................................................... 31 3.2 The significance of corporate culture for the PMI...................................................................................... 32 3.2.1 Culture collision ................................................................................................................................. 32 3.2.2 The Merger Syndrome ........................................................................................................................ 33 3.3 Post merger integration models .................................................................................................................. 33 3.3.1 Integration approach of Buono and Bowditch .................................................................................... 34 3.3.2 Integration approach of Cartwright and Cooper ................................................................................. 37 3.3.4 Acculturation model of Nahavandi and Malekzadeh .......................................................................... 38 3.3.5 Integration approach of Keller ............................................................................................................ 39 3.3.5 Critical appreciation of the integration models ................................................................................... 41 CHAPTER 3 - RESEARCH METHODOLOGY AND RESEARCH METHODS ......... 43 1. Research questions .......................................................................................................................................... 43 2. Research philosophies ..................................................................................................................................... 45 2.1 Research paradigms .................................................................................................................................... 47 2.1.1 Positivism ........................................................................................................................................... 47 2.1.2 Realism ............................................................................................................................................... 47 2.1.3 Pragmatism ......................................................................................................................................... 47 2.1.4 Interpretivism ..................................................................................................................................... 48 2.2 Research approach ...................................................................................................................................... 48 II 2.3 Research strategies ..................................................................................................................................... 49 2.3.1 Experiments ........................................................................................................................................ 49 2.3.2 Surveys ............................................................................................................................................... 50 2.3.3 Action Research .................................................................................................................................. 50 2.3.4 Grounded theory ................................................................................................................................. 50 2.3.5 Ethnography ....................................................................................................................................... 51 2.3.6 Archival Research............................................................................................................................... 51 2.3.7 Case Studies........................................................................................................................................ 51 3. Research choices .............................................................................................................................................