M&As and Value Creation: A Temporal Perspective on Fits and Synergies

Abstract

M&As have chiefly been studied by focusing on a single part of the process or on financial aspects. This thesis supplies updated input to the literature on value creation in such deals, through a case study with a temporal perspective that discusses how M&As can be managed to realize synergies and value. Salesforce’s acquisition of Tableau is analyzed by dividing the transaction process into four parts and inspecting them in turn. Five semi-structured interviews with members from both firms are conducted to collect data on the deal’s internal workings. Secondary and quantitative data from annual reports, regulators, and market research providers, among others, are included as well. All results are explored using change management and M&A theories or frameworks. The first part of the analysis focuses on pre-acquisition drivers, covering fits and synergies. It is established that, based on preliminary inspection, a relative degree of fit between the firms exists. Moreover, several sources of operational synergies are identified, covering cost reducing and revenue generating gains. In the second part, the paper dives into synergy realization efforts and finds that it is uncertain, whether a solid foundation for synergy capture is present, as despite fits, managerial actions and plans lacked during the acquisition. Thirdly, change management and post-merger integration are studied and show that similar cultures are not sufficient to overcome a poorly managed process. A failure to communicate, combined with unforeseen external obstacles and aggressive alignment, caused inefficiencies and demotivation.
The findings are mobilized through a discussion of the acquisition’s value creation. Actual synergy capture is discussed, next it is deliberated whether the deal can be called a success three years later, before reviewing how M&As can be managed more successfully, based on this case. Cost synergies were realized and maintained, whereas revenue synergies experienced issues. Although certain product synergies were captured, an absence of a plan diminished both communication and awareness, which left other synergies unrealized, while a third category of benefits are only now starting to become captured. Go-to-market synergies suffered from imposed standardization and inadequate contact to key customer decision-makers. The acquisition was successful at generating revenues but did not live up to its high synergistic expectations.
Based on the results, limited value was produced from fits and synergies in Salesforce’s acquisition of Tableau. Still, the case and its issues are used to create a framework for the successful M&A process, which can be used to achieve more positive outcomes than the acquisition at hand did.