How can the turnover of top management influence target firm's perforance after a M&A?

Abstract

After acquiring a company, the acquirer must make a number of decisions regarding the level of integration that is desired, including how to conceptualize the internal organization, what to do with the top management, how much operational autonomy the acquired firm is given, and what vision and values must be integrated. Whether or not top executives are retained is seen to be a key factor in determining the success of an acquisition. The firm's resources, clients, and organizational culture are all obvious to the executives. For acquiring companies, it is difficult to recreate this knowledge. Acquisitions sometimes fail as a result of choices made on the integration of the acquired business during the post-acquisition phase. One of the crucial decisions an acquirer must make is whether to keep or fire the senior executives of the business they have purchased.