Do the Customers Matter in Mergers and Acquisitions?

Abstract: Purpose: The purpose of this study is to examine the relationship between post merger financial performance and customer reactions on M&As, as well as how the issues of strategic relationships, integration, marketing, and human resources influence these customer reactions. Method: One of the main reasons why M&A research lacks so much of customer reactions is that the methodological mainstream of M&A research in finance, economics, and strategy areas consist of quantitative surveys based on existing stock market and accounting data, which do not include more detailed customer, employee, and process data. The chosen methodology for this research is the case survey methodology which is a “quantitative analysis of patterns across case studies” (Larsson, 1993, p.1). The study contained of 70 M&A case studies, with corss-sectional data that was examined through regression analysis. Theoretical framework: The study was based upon the integrative M&A framework from Larsson and Finkelstein (1999) which examines M&A performance through a holistic view. The customer and marketing dimensions of this study was mainly based upon Öberg’s (2008) studies about customers’ role in M&As. Conclusion: The main finding of this study is the clear and very positive relationship between M&A performance and customer reactions, measured mainly by financial performance but also through synergy realization. Even though this relationship should be obvious and selfevident, the role of the customer in the M&A literature has been poorly examined (Öberg, 2008). This study gives new perspective that the customer reaction matters in the specific M&A situation, compared to previous (Hallowel, 1996) findings that customer satisfaction determine profitability in general. Hence, our findings support the idea that the role of the customer in an M&A is important and should be accounted for when examining determinants and reasons for M&A performance.