Research: How Management Practices Impact M&A Outcomes

How do a firm’s management practices influence outcomes when it comes to mergers and acquisitions? A recent study leveraged U.S. Census data to quantify the extent to which more than 35,000 manufacturing plants employed structured management practices, and found that firms with more-structured management were more likely to become acquirers, while those with less-structured management were more likely to be acquired. They also documented a strong spillover effect: After an acquisition, the target company tended to adopt more-structured management practices more similar to those of their acquiring company. In addition, the researchers found that more-structured management practices correlated with stronger performance in a number of financial success metrics, suggesting that investing in these practices can be an effective strategy for any company to improve business outcomes.