Critical Factors of Strategic Planning Process of Mergers and Acquisitions: A Comparative Study of Indian Banking and Information Technology Sector

Abstract

(i) Problem statement: Frequent high failures due to the lack of connectedness among various independent research schools, underline the significance of acquiring a deep understanding of the complexities related to the Mergers and Acquisitions (M&As) process. This emphasizes the essential requirement to conduct a comprehensive analysis of the factors impacting the overall performance of M&A. (ii)Research objectives: The current study advocates that a strategic M&A plan emphasizing the different phases and their critical factors will facilitate an understanding of the M&A, and reduce failures. The present study examines the impact of three phases of the strategic planning process- M&A intentions, the Pre M&A planning phase, and the Post-M&A planning phase on the Post-M&A performance of Indian banks and IT companies. The study also identifies the motivating intentions and the critical factors of the Pre- and Post-M&A planning phases of the Indian banking and IT sectors. (iii) Research objectives: The current study examined the horizontal M&A deals in the Indian banking and IT sectors for five years (2015-2019). A self-structured questionnaire was used to collect data from in-house full-time professionals in different managerial positions in the acquirer banks and IT companies in the Punjab, Chandigarh, and the National Capital Region (NCR), Mumbai, and Bengaluru regions of India. M&A consultants in the respective sectors were also contacted. (iv) Research findings: Exploratory factor analysis (EFA) identified critically motivating intentions, and various critical factors of the Pre- and Post-M&A planning phases of the Indian banking and IT sectors. Furthermore, the developed models using the Partial Least Squares-Structured Equation Modelling (PLS-SEM) revealed significant impacts of the M&A intentions, the Pre- and the Post-M&A planning phases on the Post-M&A performance of the banks. For the IT companies, only the Pre- and Post M&A planning phases were found to be significantly impacting the Post-M&A performance. The indirect effect of the Pre-M&A planning phase significantly mediates the relationship between the M&A intentions and the Post-M&A performance of IT companies. v (v) Discussion and conclusion: Significant gaps were identified between the impact of the different phases of the strategic planning process on the Post-M&A performance of the banks and IT companies. This study recommends that a multi-factor, multi-phasic, and multi-disciplinary integrative planning-based approach is essential to overcome significant methodological roadblocks identified by previous studies and understand the intricate M&A phenomena. It integrates the critical predictor factors of different research schools to build a well-organized strategic plan, ensuring effective deal planning to make the M&A succeed.