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  Mergers and Acquisitions: Strategic-Organizational Fit and Outcomes (with Kyungmook Lee)


 

Abstract

This paper examines the effects of resource complementarity and organizational compatibility on merger and acquisition (M&A) outcomes. We also explore the effect of firms' previous M&A experiences. Our investigation focuses on two classes of events following M&As: organizational dissolution and involvement in subsequent M&As, with the firm continuance following the M&A as the “non-event.” Using a multinomial logit model for repeated-event history analysis that reflects the dynamics of organizational evolution, we analyze 461 M&As in the history of the Dutch accounting industry. Our results show that compatibility is not associated with the dissolution rate but is strongly related with the probability that a firm will engage in additional M&As. Resource complementarity is negatively associated with the odds of dissolution and positively associated with the probability to engage in additional M&As. The results also indicate that previous M&A experience enhances both the dissolution rate and rate to engage in additional M&As.