I am currently faced with the challenge to measure integration speed of an acquisition or a merger with secondary data. Usually companies do not communicate once a target has been integrated successfully. They only announce for instance that an M&A deal has been signed (this would be the starting date and easy to find online). However, how can I find out when the company was fully integrated? I am focusing on Dutch M&A deals and it seems that Dutch companies do not communicate about it much apart from when a deal has been signed. Sometimes it is possible to find out when a target ceased to exist but this too is quite difficult. I saw in most papers that surveys were used but due to my time constraint it is a too high risk to send out surveys to Dutch corporate M&A teams due to the high possibility of a low response rate. I also saw in one paper that they have used survival analysis. However, I could not make sense in that paper how they specifically calculated integration speed for each deal. If anyone has an idea or knows a paper that has done that with secondary data, I would appreciate any help.
There is route how to tackle this problem. You take all public data of merges with known internal data (stock market, profit, ...) and apply complexity measures.
The same will be done for companies without known internal data.
You will try to somehow decode the internal development from just external data using just complexity measure and statistics by comparing the above provided two classes of companies. Alternatively, you can use AI/ML as extension of statistics when it fails.
Speed in M&A integration:: The first 100 days
D Angwin - European management journal, 2004 - Elsevier
Speed of acquisition integration: Separating the role of human and task integration
F Bauer, D King, K Matzler - Scandinavian Journal of Management, 2016 - Elsevier
I think the above two papers will help you out in this regard.
Thank you very much for your help! Unfortunately both studies rely on primary data as they sent out surveys. However, I am interested in measuring it through secondary data and since they do not focus on Dutch firms, I can also not make use of their data.
Dear Anissa,
Speed of acquisition integration is indeed challenging to measure. first of all, it is a confidential and mission critical information that companies do not want to disclose to their competitors. Secondly the metric of acquisition integration itself is quite difficult to define since each merger is different than the other both in scope and in timeframe. Last but not least you may use some proxy measurements such as financial indicators or stock market valuation of the merged company. However this can also be difficult if the company is not listed on the stock market and does not disclose financial balance sheet information.
Anissa Adewumi
Dear Farhad Abdollahyan
thank you very much for your reply! I am only focusing on companies listed on the stock market so I guess obtaining financial information will not be a problem. Would you mind further elaborating on how a proxy like financial indicators or stock market valuation can be used to measure integration speed? That would be very helpful.
Dear Anissa Adewumi
One one of the major objectives of any merger is to generate shareholder value, that can be measured by stock price variations or by financial indicators such as net profit, sales, return on assets or equity.
Dear Anissa Adewumi
Currently I am struggling with the same problem. For my research I also want to operationalize the speed of integration with secondary data and I am now also forced to use a proxy. I read about stock evaluation in the comments above. I was wondering if you still managed to measure speed op integration and if so, if you could explain how you did this?
Anissa Adewumi I think that would tricky to measure, as you are finding. Each integration will have unique characteristics. For instance, depending on whether it was a takeover, reverse takeover, merger of equals etc. Size of each organisation, geographic location, management culture and complexity of the two businesses will be differentiating factors. Which will make it difficult, or even risky, to attempt to generalise. Therefore if I had to tackle this, I would take a case study approach looking for actual cases that most closely meet your research aims.
Anissa Adewumi , indeed Christopher C Kelly is right that each integration has its own logic and indicators, most of which are confidential. My suggestion was to capture it by proxy indicators such as stock market performance or publicly disclosed quarterly financial reports.
Farhad Abdollahyan How can you explain the speed of integration through stock price variations? I am curious how I can operationalize this and therefore wonder how I can determine how long the integration takes by looking at the variations? Which time frame do I have to study to be able to make a statement about this?
Tim van Kooten
you can use event study method. compare the stock price before and after the merger date and see if any value were created according to market perception.
Article An Event Study Analysis of Stock Price Reaction to Mergers o...
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