A strategic decision-making framework uncovering the non-financial strategic factors that support the success of business acquisitions

Abstract

A method of organisational growth is expansion through business acquisition. This method of expansion is considered a faster mode as compared to organic growth. According to research studies that have been completed, a very high percentage of BAs are unsuccessful. Some research suggests that the rate of failure is between 70% - 90%. Although the business acquisition success rate is low, organisations continue to utilise business acquisitions as a growth mode. Factors that affect the success of a business acquisition process, can be categorised into financial and non-financial dimensions. A significant amount of research has focused on these financial dimensions, and these are usually the primary focus area of a due diligence process. Whereas the non-financial dimensions such as culture, management and human resources could also support the success of business acquisitions. To date, a holistic model of non-financial factors remains scarce. The study aims to clarify the non-financial factors that leaders must carefully consider ensuring the success of this strategic business acquisition endeavour. A qualitative, exploratory research study has been employed to further understand the non-financial factors in support of successful business acquisitions. The data collection was completed through 16 semi-structured, in-depth interviews with experts within the business acquisition field. The study delved deeper into the non-financial factors that impact the success of business acquisitions. These were categorised as internal and external, tangible, and intangible non-financial factors, where Internal and external referenced the perspectives of the acquiring and the targeted organisation. The study has identified the key non-financial factors that contribute to the success of business acquisitions. These factors have been documented in a simple holistic framework. This study contributed to the literature and to business by presenting a framework uncovering the non-financial factors in support of successful business acquisitions