Acquirer and Target Competitive Strategy & Operational Effectiveness and Their Effect on Acquisition Performance

P.A. Mudde and T. Brush (USA)


Acquisitions, Strategic Deficiency, Strategic Distance, Effectiveness Deficiency


This paper examines how similarities between acquirers and targets affect post-acquisition performance in horizontal acquisitions. It develops the concept of strategic distance between an acquirer and target and argues that greater distance between the strategic orientations of an acquirer and its target interferes with the realization of post-acquisition synergies. It also develops the concepts of strategic deficiency and effectiveness deficiency on the part of targets, relative to acquirers. It argues that an acquirer with comparative advantages in strategy and efficiency relative to its target is expected to realize better post-acquisition performance. It also reviews empirical research examining how similarities and differences between acquirers and targets affect acquisition performance. We conclude that acquirers wishing to maximize post-acquisition performance should select targets that minimize strategic distance and effectiveness deficiencies.

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