1. Problem indication
Mergers and Acquisition (M&A) remains an important topic for top management in regards to corporate development (Cartwright & Schoenberg, 2006). It functions as a tool to redirect or renew a company strategy (Ferreira, et al, 2014).
Over the years, M&A topic received significant attention from academics (Cartwright & Schoenberg, 2006; Haleblian, et al, 2009). However, prior research conducted on the topic of merger and acquisition focused on dyadic relationships (Haleblian et al., 2009), usually involving M&A’s between two competitors (Homburg & Bucerius, 2006). More specifically, as defined by De Man and Duyster (2005), “combination of two, more or less equal, companies as well as to acquisitions where one company obtains majority ownership in another company”. In spite of valuable findings, limited research has been carried out on the topic of multi-partner merger.
Multi-partner merger refers to a M&A between two or more companies. These merger and acquisitions may occur between direct competitors (e.g. prior M&A attempt in airline industry between multiple airline carriers also known as Alcazar) or between subsidiaries of a holding company (e.g. merger between Coca-Cola Enterprises, a Coca Cola bottling company, with Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke AG).
Furthermore, the multi-partner mergers follow similar process as the regular M&A’s. However, it is unknown which circumstances influence the successful completion of the merger. The literature has not directly demonstrated a clear link between the relationship of multi-partner merger and different M&A characteristics. Thus, leaving a gap in the literature for further exploration.
Building from the existing research on M&A’s, this study’s aim is to provide insights and understanding in multi-partner mergers. More specifically, this study will focus on the circumstances under which the multi-partner mergers are likely to occur.
2. Problem statement
The central questions in this research is as followed:
Under which circumstances are multi-partner mergers more likely to occur?
3. Research questions
To answer the problem statement following research questions will be discussed throughout the study:
i. What are the main characteristics of M&A?
ii. Which characteristics are more likely to influence to pursue a multi-partner merger?
iii. What is the impact of prior experience in merger and acquisition on the relationship between environmental uncertainty and a successful completion of multi-partner merger?
iv. What is the impact of degree of ownership stake on the relationship between environmental uncertainty and a successful completion of multi-partner merger?
4. Research design
4.1 The purpose and type of research
The purpose is to identify the key characteristics concerning the multi-partner merger and to explain whether these factors predict circumstances under which such mergers are more likely to occur. Thus, leading to an explanatory cause and effect research. To analyze these relationships a quantitative study will be conducted. However, due to limited research on the topic this study is also of exploratory nature. This research might provide more insights and understanding around the multi-partner merger phenomenon.
4.2 Sampling strategy
The sample used for this study consists of financial and company data and will be collected from the available databases at Tilburg University. The specific databases are discussed in the chapter data collection.
The sample for this study will be constructed using the following steps:
1. Identify and select multi-partner merger companies. These are companies which are involved in two or more M&A’s.
2. Determine the industry
3. Select public companies to ensure data availability and accessibility
4. Ensure X number companies per industry. The aim is to ensure that all industries are equally represented.
Considering the limited research on the topic there is no focus on specific country or type of organization since the study focuses on all mergers between two or more organizations. Moreover, for this study matching sampling is considered to reduce bias in the estimation of the treatment effect (Rubin, 1973; Stuart, 2010). The objective is to choose well-matched samples of the multi-partner mergers and dyadic relationship M&A, thereby reducing bias due to the covariates (Stuart, 2010).
5. Data collection
This study will make use of databases such as SDC Platnium, Bureau van Dijk, ThomsonOne, Orbis and Zephyr. These databases hold sufficient data on merger and acquisition deals and are accessible via data-lab at Tilburg University. Data from these databases will be constructed to enable to collect consistent and relevant data to measure the relevant key characteristics and variables. The collected data will be combined into one database in order to conduct the appropriate analysis.
6. Data analysis
At first, descriptive statistics of the variables will be provided as an indication of the composition of the sample. The relationship among all variables will be illustrated by means of correlation analysis. Because of the binary nature of the dependent variable, whereby acquisition completion will take the value of 1 if the announced acquisition attempt is completed and 0 otherwise, logit regression will be used to analyze the determinants of the outcome. For this study a set of control variables will be introduced to rule out alternative explanations.
7. Validity and reliability
The databases used to retrieve the sample data for this study is widely used among students as well as academics. The construct of this study is composed and aligned based on existing studies with similar constructs and reliable sources that complement this research independent and dependent variable. Furthermore, control variables will be introduced based on previous literature to reduce the possible alternative explanations. To further increase the reliability, all necessary steps will be clearly documented.
8. Literature references
Calipha, R., Tarba, S., & Brock, D. (2010). Mergers and acquisitions: a review of phases, motives, and success factors. In Advances in mergers and acquisitions (pp. 1–24). Emerald Group Publishing Limited. Retrieved from http://www.emeraldinsight.com/doi/pdf/10.1108/S1479-361X(2010)0000009004
Cartwright, S., & Schoenberg, R. (2006). Thirty years of mergers and acquisitions research: Recent advances and future opportunities. British Journal of Management, 17(S1). Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8551.2006.00475.x/full
Cooke, F. L. (2006). Acquisitions of Chinese State-Owned Enterprises by Multinational Corporations: Driving Forces, Barriers and Implications for HRM. British Journal of Management, 17(S1), S105–S121.
Dikova, D., Sahib, P. R., & Van Witteloostuijn, A. (2010). Cross-border acquisition abandonment and completion: The effect of institutional differences and organizational learning in the international business service industry, 1981–2001. Journal of International Business Studies, 41(2), 223–245.
Ferreira, M. P., Santos, J. C., de Almeida, M. I. R., & Reis, N. R. (2014). Mergers & acquisitions research: A bibliometric study of top strategy and international business journals, 1980–2010. Journal of Business Research, 67(12), 2550–2558.
Haleblian, J., Devers, C. E., McNamara, G., Carpenter, M. A., & Davison, R. B. (2009). Taking stock of what we know about mergers and acquisitions: A review and research agenda. Journal of Management, 35(3), 469–502.
Homburg, C., & Bucerius, M. (2006). Is speed of integration really a success factor of mergers and acquisitions? An analysis of the role of internal and external relatedness. Strategic Management Journal, 27(4), 347–367.
Rubin, D. B. (1973). The use of matched sampling and regression adjustment to remove bias in observational studies. Biometrics, 185–203.
Stuart, E. A. (2010). Matching methods for causal inference: A review and a look forward. Statistical Science: A Review Journal of the Institute of Mathematical Statistics, 25(1), 1.
Zhang, J., Zhou, C., & Ebbers, H. (2011). Completion of Chinese overseas acquisitions: Institutional perspectives and evidence. International Business Review, 20(2), 226–238.