The Research Of Relationship Between M&A Experience And Post-merger Performance

Whether M&A create value and the factors that influence the value creating isan important area research direction of the mergers and acquisitions field,particularly how M&A experience affect the value creation has become a hot topicin this area. This study is on organizational learning theory and study the learningeffect and post performance of2206M&A events from1998to2012undertaken byChinese listed companies.This study found a U-shaped relationship between the number of M&A eventsand post-acquisition performance, which means the more the experience thecompany has, the post acquisition performance do not necessarily become better.From this result we know that the experience do not bring the improvedperformance for sure, but the experiential effect will become apparent only undercertain conditions. In order to find those conditions, we divide experience intoseveral categories. We first examine the relationship between similar experience anddifferent experience and performance after M&A. We found an inverted Urelationship, which means if the companies undertake the acquisition in one industryor in many industries; the company do not perform well after these acquisition.Similarly, we examine the relationship of the time interval and performance andfound the same inverted U relationship, which means too long or too short timeinterval between the last experience and the focal acquisition is not conducive to theperformance. The best time interval is2-5years from the last acquisition and theregression coefficient is significantly positive. We also found that company learnfrom failure experience better than success experience because failure experiencemake company rethink and reexamine its decision and help the company do betternext time. Last, we found that more flexible organization structure like divisionsystem and the matrix system is conducive to organization learning and goodpost-acquisition performance.