Strategic management literature is giving great attention to the post-acquisition integration process, even if many aspects of the management of this process are still untangled. For example, deep ambiguity still exists on the influence the presence of external management might have on the governance and management of the acquisition process. Recent research has emphasized the antecedents of the presence of an external advisor within the acquisition process that means which factors lead both the bidder and target companies to the choice of external support (Benston & Smith, 1976; Hayward, 2002; Hunter & Walker, 1990; Kesner et al., 1994; McLaughlin, 1990; Servaes & Zenner, 1996). Based on agency theory and transaction costs theory these papers identified factors affecting the governance and management of the acquisition such as the conflict of interests between bidding firm and its advisor, previous acquisition experience of the bidding firm, degree of diversification of the target firm. On the other hand, it is not yet clear the way those factors influence the acquisition outcome which has been rarely investigated by prior research highlighting a negative correlation between the acquisition performance and the presence of an external advisor (Hayward, 2002). Looking at the influence on the governance and management of the acquisition process, we assume external advisors are experienced managers owning specific self-interests which generally do not match their clients’ expectations. Therefore, greater attention is required on the analysis of the antecedents as well as the consequences of the relationship between companies involved in the acquisition and their external advisors (Russo & Perrini, 2006). We aim to empirically investigate the nature of this relation focusing on the influence external advisors might have on the acquisition performance. In particular, we would test the influence the number and typology of advisor of both the acquiring and acquired firms might have on the acquisition success.
Managing the potential conflict with an external advisor within the acquisition process
RUSSO, ANGELOANTONIO;PERRINI, FRANCESCO
2007
Abstract
Strategic management literature is giving great attention to the post-acquisition integration process, even if many aspects of the management of this process are still untangled. For example, deep ambiguity still exists on the influence the presence of external management might have on the governance and management of the acquisition process. Recent research has emphasized the antecedents of the presence of an external advisor within the acquisition process that means which factors lead both the bidder and target companies to the choice of external support (Benston & Smith, 1976; Hayward, 2002; Hunter & Walker, 1990; Kesner et al., 1994; McLaughlin, 1990; Servaes & Zenner, 1996). Based on agency theory and transaction costs theory these papers identified factors affecting the governance and management of the acquisition such as the conflict of interests between bidding firm and its advisor, previous acquisition experience of the bidding firm, degree of diversification of the target firm. On the other hand, it is not yet clear the way those factors influence the acquisition outcome which has been rarely investigated by prior research highlighting a negative correlation between the acquisition performance and the presence of an external advisor (Hayward, 2002). Looking at the influence on the governance and management of the acquisition process, we assume external advisors are experienced managers owning specific self-interests which generally do not match their clients’ expectations. Therefore, greater attention is required on the analysis of the antecedents as well as the consequences of the relationship between companies involved in the acquisition and their external advisors (Russo & Perrini, 2006). We aim to empirically investigate the nature of this relation focusing on the influence external advisors might have on the acquisition performance. In particular, we would test the influence the number and typology of advisor of both the acquiring and acquired firms might have on the acquisition success.
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