Mergers, Acquisitions, and Divestitures, oh my! 2.0

In this seventh session, and the final session of the second module of the course, we look at the remaining mode for growth (buying — mergers and acquisitions), as well as modes for corporate scope reduction through divestiture (sell-offs and spin-outs). From Puranam and Vanneste, in the first module, we began by identifying the desired synergies (4C synergies) and determined whether those synergies were best managed within or between firms (governance costs: transaction versus ownership costs). For synergies best managed within firms (asymmetric and/or high resource modification), we considered key trade-offs between internal development and acquisitions in our session on internal development (these trade-offs remains relevant for our discussion, so refresh your memory if needed). We will also consider the trade-offs between synergy creation and disruption as part of post-merger integration, and deliberate learning in the acquisition process, before moving on to divestitures. In our discussion of divestitures, we will consider the differences between sell-offs and spin-offs, the unique challenges of legacy divestitures, how divestitures play a role in growth plans, and how modularity can be used to facilitate divestiture.

Post merger integration — synergy creation and disruption trade-off

For an acquisition to be successful, you need to know what you plan to achieve through the acquisition (desired synergies), recognizing the disruption that is likely…