Mergers and Acquisition Synopsis

We examine what happens to firms that are created by a merger or acquisition (M&A). We claim that the match between merging firms, together with their prior Growth history, are crucial for understanding the evolution of the newly created Organization. Organizational founding is typically associated with entrepreneurs, but many Firms arise out of existing firms through spin-offs or M&As. What sets the former apart from the latter is inheritance: the skills that endow an M&A-based firm originate from the parents, while de novo firms have to build capabilities from scratch. Whether new firms formed by the fusion of two existing firms benefit from previously acquired assets hinges partly on the combination and commingling of previously separate bundles of resources. The question that we should ask is, under what conditions will the combining of such bundles of skills yield distinct benefits for the new firm? ergers and acquisitions can be lumped together as the mode through which previously independent firms combine to become a single entity. They may be friendly or hostile. Many studies have examined M&As. In some cases they involve co-equals, while in other instances one firm dominates its counterpart. Mergers are distinguished from acquistions in that mergers are assumed to involve two firms with roughly the same size or equivalent resources. If one of the two firms is much smaller we are inclined to label their fusion an acquistion. .