Mergers and Acquisition Strategy in the IT-consulting Industry. A capability perspective on the decision-making process

Abstract

Mergers and Acquisitions (M&A) are a central part of corporate strategy as a useful measure for several strategic business goals. However, realising predicted values has proven to be very complicated and troublesome. Research has shown that superior acquisition performance is related to pre-deal decisions and planning with a view on the entire M&A process. Despite the extensive scholarly work on the pre-deal phase, vital questions remain unanswered, especially regarding process capabilities. This study aims to determine the pre-deal decision-making capabilities that acquirers in IT-consulting should develop to make value-creating acquisitions. To answer this, we conducted 34 interviews with executives and M&A experts active in the IT- consulting industry, together with a case study of a Swedish IT-consulting company. An analysis of the literature review revealed three main areas: strategy trade-offs, operational tactics, and process development. Under each area, the empirical find- ings revealed success factors regarding ambition trade-offs, strategic implementation trade-offs, efficient decision-making, negotiations, post-merger integration consider- ations, learning, and capability development. In the end, we concluded both impli- cations for theory and practitioners. The most interesting theoretical implications were how to initiate deals by attracting targets through effective branding rather than searching for and approaching targets. Practical implications provide four M&A strategies and a process toolbox together with a sustainable M&A road-map.