James M. Haley and Mohammed H. Sidky
This study examines how leadership, teamwork, and organizational learning can contribute in making mergers and acquisitions work. Our intention is to identify critical factors and practices needed for merger success. Our research is part of an ongoing project, and builds on previous analysis of merger success/failure in such organizations as Standard Oil, Exxon Mobile, and Time Warner-AOL. In this paper, we turn our attention to the recent merger of Pixar and Disney. In our view, the Disney-Pixar case seems to be a good example of a successful merger in progress. This is demonstrated very clearly by recent box office successes such as Academy Award winners Ratatouille, WALL-E, and the current hit UP! Our analysis will show how leadership, teamwork, and organizational learning have led to this success, in an area where failures seems to be the norm. Why Merge? Mergers and acquisitions have been with us for a long time, and represent a normal part of organizational growth and development in the business environment. Through mergers and acquisitions, organizations can gain access to technology, resources, knowledge workers, as well a market share. In 2007, the global value of mergers and acquisitions hit an all time high of $4.5 trillion. This was 24% higher than the previous year. According to Reuters (9/ 21/07), the first nine months of 2007 saw a 37% increase in global M&A activity over the record year of 2006. Although the recent economic recession has decreased the number of mergers, prospects for 2009 are seen as representing good deals and opportunities. Unfortunately, the overall record of M&A’s indicates that most mergers end up in failure.
Understanding Why Most Mergers Fail According to Lundberg (2001) corporate combinations fail to achieve their anticipated benefits 70% of the time. Research conducted by Harding and Rovit (2004) involving over 50 case studies, 15
References: AOL Time Warner Annual Report 2000 Argyris, C. and Shon, D.A. (1996) Organizational Learning II, Theory, Method and Practice, Addison-Wesley Publishing Company Barney, J Tichy, N.M. and Ulrich, D.O. (1984) “The Leadership Challenge – A Call for the Transformational Leader” SMR Forum. http://python.rice.edu/~arb/Courses/750_04chapter10.pdf Exhibit 1 Disney Steering Committee1