A Study On Acquisition Capability And Acquisition Performance

In recent years, M&A in the investment field reached an unprecedented level in the whole world. M&A activity also is increasingly frequent and active in China. While at the same time, China’s enterprise M&A activity failure rate is high, even fail in the early stages. Throughout the evolution of domestic and international acquisition capability literature, whether it is based on the discussion of the acquisition capability directly or indirectly from the acquisition experience to examine acquisition capability, to some extent, it can be attributed to the establishment and development of acquisition capability. This paper will analysis of the learning mechanism of acquisition capability of China’s listed companies in detailed based on the relevant domestic and international literature, combined with the reality of China’s listed companies, integration of organizational learning theory, enterprise resource theory and the theory of M&A efficiency. From the managerial learning perspective, this paper will use the process of organizational learning theory to explore and test how the knowledge and experience of managerial (team) has an influence on acquisition capability. This paper will also apply the experiential learning theory testing acquisition experience moderating effects of the acquisition performance. Finally, the paper examines experimental impact of M&A on success rate by using the Cox proportional hazards model. The study of these issues is not only providing new empirical evidence and theoretical support for listed company, but also at the same time for the people to understand the mechanism of the formation of acquisition capability as well as evaluating acquisition capability. So this study has an important theoretical and practical significance.Chapter Ⅰ is the introduction, including research background and significance, research ideas and structure, terms defined, and major research conclusions and innovation. The concept includes mergers and acquisitions, experience, acquisition experience, ability, acquisition capability, acquisition capability development, performance and acquisition performance.Chapter Ⅱ is the literature review, including the theories of acquisition capability, acquisition experience and acquisition performance both in domestic and international literature and recent progress. This chapter focuses on a review of organizational learning theory on capability acquisitions. Chapter III is the theoretical analysis of acquisition knowledge and acquisition capability, including theoretical analysis of serial acquisition, acquisition knowledge, learning mechanism, as well as acquisition capability development. This chapter focuses on theoretical analysis of tacit knowledge in the role of acquisition capability, as well as to enhance the acquisition capability through deliberate learning mechanisms.Chapter Ⅳ is the empirical research of the relationship of knowledge and experience of the managerial team and capabilities, especially in executive level experience, such as CEO, CFO. This chapter focuses on the use of event study methodology to examine the managerial acquisition capability.Chapter Ⅴ is the empirical research of the relationship of serial acquisition, acquisition experience and acquisition performance, especially in company level experience and acquisition performance. This chapter focuses on the accounting-based performance indicators to test the relationship of company’s level of acquisition experience and acquisition performance.Chapter Ⅵ is the empirical research for the serial acquisitions and its success rate, including the relationship of acquisition experience and acquisition success rate, the impact of mergers and acquisition success rate. This chapter focuses on the use of Cox proportional function model analysis of M&A success rate.Chapter Ⅷ is the conclusions and policy recommendations.The main conclusions of this paper are as follows:(1) Managerial (team) knowledge and experience with acquisition capability are positively correlated, but not significantly. However, the CEO of the management team, the CFO of personal knowledge and experience has significantly influence to acquisition capability.(2) Short interval between the two acquisitions, the managers do not fully time to study experience learning, which will bring the poor performance to the current mergers and acquisitions. Further results of the study also found that prior experience in mergers and acquisitions will make acquisition performance is reversed.(3) The use of survival analysis Cox proportional hazards model found that the success rate with acquisition experience higher than those without acquisition experience.The major improvement and innovation in this study are as follows:First, the study uses the unique perspective on acquisition capability. Organizational learning research in the past focused learning experience in mergers and acquisitions at the corporate level. Organizational learning consists of three levels-individual, team and company. So the company level contains only a surface, the individual level of learning is the key aspects of organizational learning. From executives (team) level of acquisition experience to explain how it affects the performance. It is very important for a better understanding of learning contribute to the formation of the acquisition capability.Second, this paper elaborated the importance of deliberate learning mechanism in theory including three-tier (executive individual, executive team and corporate) and four-stage (experience articulation, experience codification, experience sharing and experience internalization). Deliberately learning is kind of to long-term mechanism for enterprises enhance their acquisition capabilities.Third, this paper empirically exanimated the above theory. Based on our current mergers and acquisitions in the continuous acquisition of this phenomenon, using regression analysis and robustness testing directly examine the impact of acquisition capabilities of individuals, teams, knowledge and experience. The results found that executive’s acquisition knowledge and experience, especially CFO’s acquisition knowledge and experience has an important role of acquisition capacity building. Corporate acquisitions experience has a positive effect on the performance. Corporate with acquisition experience has a higher M&A success rate than that without acquisitions experience.