Synergy Management: From Pitfalls to Value
Integrating compatible elements of previous research with insights neglected by the strategic management, change management, organizational behavior and finance literature, this chapter advances a conceptual comprehensive framework to analyze synergy mana
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Synergy Management: From Pitfalls to Value
Abstract Integrating compatible elements of previous research with insights neglected by the strategic management, change management, organizational behavior and finance literature, this chapter advances a conceptual comprehensive framework to analyze synergy management in M&As. The framework highlights the main dimensions of synergy management, the most relevant synergy pitfalls and the ways to overcome them. An effective synergy management requires an analysis of five dimensions: the steps of the M&A process, the several values of synergy, the forbidding effects of poor synergy management, the potential causes of synergy inflation, and the selection of solutions to synergy pitfalls. The study changes the focus from a single, generic synergy trap to three more analytical, useful synergy pitfalls: the mirage, the gravity hill and the amnesia. By shedding light on synergy pitfalls, we enrich M&A literature and enhance practical solutions to reduce pitfalls in synergy management. Keywords Mergers • Acquisition • Synergy • Pitfalls • Trap
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The Synergy Pitfalls
The management of synergy is a relevant topic in M&As. The existence of several causes of synergy trap implies the existence of multiple types of risk. However, past studies reattach an unsuccessful synergy achievement to the risk of a “generic” trap. Research examining the severalpitfalls that may hinder the success of M&A deals remains surprisingly limited (Goold and Campbell 1998; Hitt et al. 2009). Since risks are reattached to a single and generic trap, managers and advisors have been given little guidance on the specific causes of “synergy pitfalls” and on the most effective way to avoid them. Consequently, this gap requires the careful identification of the main types of synergy pitfalls by connecting each pitfall to the related cause and the most useful solutions (Fiorentino and Garzella 2015a, b). There are many pitfalls, and not a single trap, that could affect the synergy management that transforms a good M&A into a very bad deal (Hammond et al. 1998). The executives involved in M&A agreements have often underestimated the management of synergy pitfalls, and this lack of attention has substantially driven deal failure (Harding and Rovit 2005). © Springer International Publishing Switzerland 2017 S. Garzella, R. Fiorentino, Synergy Value and Strategic Management, Contributions to Management Science, DOI 10.1007/978-3-319-40671-8_4
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4 Synergy Management: From Pitfalls to Value
Fig. 4.1 Improper synergy management
Despite significant progress, the extant synergy management literature still suffers from several shortcomings. There is a lack of integration across research paths pertinent to the study of synergy management. We contribute to the existing literature by improving the analysis in the strategic management literature, considering and incorporating insights from new streams and the contiguous literature. Indeed, we answer to the call for further research about “how” to manage synergy pit
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