David Pendleton

Com 601- Prospectus Assignment

10-20-15

The Factors and Impacts of Business Acquisitions

David Pendleton

Introduction:
An acquisition is defined as the process of one firm acquiring a company to
build on the strengths or weaknesses of the acquiring company. Acquisitions are
primarily carried out to strengthen the parent company, however there are several
factors that influence whether an acquisition is beneficial or harmful. Spending a
large amount of resources to acquire a firm only to have that firm underperform can
be a huge loss. Time, money, and even key employees can all be lost due to a poor
acquisition. This is why it is very important to recognize the factors and impacts of
business acquisitions. Having an understanding of acquisitions can usher in a
wealth of new knowledge and can prevent a negative outcome.

Study Questions:
This case study will attempt to answer a few key questions.
Question 1: What are the factors that influence a business acquisition?
Question 2: Why do these factors influence a business acquisition?
Question 3: What affects do acquisitions have on acquired and acquiring firms?
The answers to the study questions will rely heavily on the literature reviewed
and a specific acquisition that the author has access to study. The variables being

tested will include likeness between firms, size of firms, management styles, level of
communication, financial health of acquired firm before acquisition, employee
morale, employee perception, productivity, and profitability. These variables will be
tested within a recently acquired organization by a large publicly traded company.

Study Propositions/Units of Analysis

The difference of the size between the acquired firm and acquiring firm can
easily be measured and compared to other studies. The likeness between firms can
also be ascertained by the classification of their assets. Management styles, level of
communication, employee morale, and employee perception can all be determined
through surveys of the employees and by interviewing members of management.
The parent company is publicly traded therefor, data concerning profitability and
productivity can be gathered from publicly shared reports as well as surveying
employees.
Once all of the information is gathered the information gathered from the
surveys will be statistically analyzed to form results. The interviews of supervisors
will be more qualitative in nature but, will help explain findings and add to the
discussion section of this case study.

Linking Data to Propositions

The literature reviewed has several examples of factors that may influence
acquisitions. There are also several examples of how studies were carried out to
obtain this information. The next several paragraphs will recap what was learned
from the literature review and why this study will examine the specific factors it
does.

There have been several studies of business acquisitions that look at various
aspects of each acquisition such as how employees are affected and the traits of
the companies involved. Despite all of these studies there are still numerous
questions about the impacts acquisitions have on both the acquired firm and the
acquiring firm. There are even more questions and arguments of why some
acquisitions are deemed successful and others failures. These are important
questions to answer because successful acquisitions can be very beneficial as
observed in the United Kingdom where foreign owned organizations were on
average 41% more productive between 1987 and 1992 (Harris 562).
The following studies acknowledge that the human factor is sometimes
overlooked but, is very important to the success of a company. As observed by
Paruchuri and colleagues, pharmaceutical firms productivity was negatively
affected by being acquired. Evidence suggested that the scientists of these firms
were generally less productive if there were differences in expertise of the acquired
and acquiring firms or if the scientist incurred a loss of standing upon acquisition
implementation (545). Several studies have been done that survey and interview
employees of acquired and acquiring firms to analyze how and what is affecting
them during acquisition. Georgiades and Georgiades observed that most employees
do not want to go through an acquisition and that most feel as if management did
not consider the human factor when acquiring a firm. They also found that a lack of
communication caused stress and anxiety amongst employees. Several employees
felt as if they might not keep their job after the acquisition and would detach from
their work. Sometimes employees would work much harder than usual to appear
needed. This lack of communication also leaves employees feeling as if unknown
people are pulling the strings. There can also be feelings of no incentive to stay

which led to employee turnover. Another aspect of the human factor that
Georgiades and Georgiades found were that employees tend to go with the crowd
and have unjustified negative feelings about acquisitions. They also discovered
there was a genuine feeling of loss as a family feeling was replaced with a
bureaucratic system. This led to insecurity and motivational problems (101).
An entire study by Hambrick and Cannella further explains why there is
employee turnover upon being acquired. They investigated why executives depart
from an acquired company. Drawing from 97 firms and 430 affected executives they
concluded that the further the gap was between the acquiring company and the
acquired companys performance the greater the departure rate was. Executives
who lost their autonomy, were older, or did not receive enhancements while their
colleagues did all were more likely to leave. The literature also suggests that the
greater the difference is between the relatedness of the two firms is the greater the
departure rate of the executives are in the acquiring firm (733).
Although the majority of these findings appear as if the human factor is
destined to have a negative effect when being acquired, other studies have shown
the opposite can be true. Wagner and colleagues performed a case study about a
cement factory in Brazil. The cement factory was acquired by a foreign organization
and was deemed successful for both the acquiring firm and the acquired employees.
By introducing an ethical code of conduct, utilizing face to face meetings between
upper management and employees, and developing employees through training,
the acquiring organization gained employee trust. The acquiring company also
attempted to match the management style of the acquired firm. More employees
were hired and overall production nearly doubled within thirty days of acquisition. In

this study it was noted that there was still some turnover but, less than predicted
(261).
The following literature no longer focuses on the human factor when
determining the impact of acquisitions. Instead these case studies examine the
effect of the state of the acquired company, the assets owned, and the specific
factors that have an effect on acquisitions. Bruton, Benjamin, and White observed
that related acquisitions of distressed firms performed better than unrelated
acquisitions. They also found supported evidence that firms with prior acquisition
experience performed better than those without and that there is no significant
difference between the performance of acquiring firms based on size (972). Sorescu,
Chandy, and Prabhu similarly studied what characteristics of an acquiring firm make
them better off to acquire firms compared to others. The data collected from a
database of acquisitions yielded evidence to support all of the hypotheses of this
study. The greater the product development and support assets of the acquiring
company are the greater the innovation potential of the acquired target is. This built
on the next supported hypothesis that the better the innovation potential of an
acquired firm is, the more extensive the deployment of this potential (57).
The state a company is in before being acquired is important as supported by
Brutons study. Other researchers delve deeper into the specifics of the relationship
between the acquiring and acquired firm. Datta constructed a study where several
questionnaires were sent to high ranking executives of acquired firms that
underwent high integration and low integration. The answers to these
questionnaires were analyzed and indicate a number of interesting points. The
evidence supports that a difference in management style between the acquired and
acquiring firm are negatively related in both low and high integrated scenarios.

Interestingly there was not a significant relationship when evaluating differences

between the firms reward and evaluating system (281). Several other factors were
assessed by Kusewitt in his study that examined acquisition strategy. He studied the
role relative size, acquisition rate, industry commonality, timing, type of
consideration, acquire profitability, and price paid had in an acquisition.
The results indicated that all of these factors except for price paid had an
effect on performance. Industry commonality and acquire profitability were
positively related to performance. While relative size, acquisition rate, timing
relative to the market cycle, and percentage cash acquisitions were negatively
related to performance. The importance of this study highlights that acquisition
factors work together to have an effect on acquiring and acquired firms rather than
just internal operations (151).
Lastly, the factor of being a serial acquiring firm was studied. Laamanen,
Tomi, and Keil used a database to find the relationship that serial acquiring firms
had on acquired firms. Several conclusions were obtained by the authors of this
study. Both acquisition rate and variability of the acquisition rate negatively
affected performance. However, larger acquirers are able to acquire at a higher rate
and with more variability. The authors found evidence that an expanding industry
presence of the acquirer decreases an organizations ability to perform acquisitions
at a high rate (663).
The literature reviewed can be broken into two main categories. Studies that
focus on the human factor of an acquisition and studies that focus on the aspects of
the firms themselves. The studies focusing on the human factor acknowledge that
the employees are vitally important to whether or not an integration is successful or

not. A commonality between these study show that poor communication between
the acquired and acquiring firm is a major culprit that causes negative feelings
toward an acquisition. Another common theme observed is that the less alike the
acquired and acquiring firms are the more likely turnover rate is. A difference in
management style between firms also has this effect.
Studies that focused more on the firms themselves on not the human factor
had several agreements and a few disagreements. Most studies agreed that a large
difference in size between acquired and acquiring firms had a negative effect on the
overall performance of the firm. A disagreement observed between these studies is
the fact that most studies have evidence supporting that acquisition experience has
a positive impact on performance. A few studies however, show that serial acquirers
who acquire many different firms has a negative impact on performance. This is a
direct contradiction.
The literature reviewed supports the idea that acquisitions can be very
beneficial. More importantly the literature supports the fact that there are factors
that have an effect on the outcome of an acquisition. There are many agreements
and a few disagreements between the studies and there are many factors that are
intertwined. For these reasons this case study will review the impact of acquisitions
to further increase the knowledge of what impacts a business acquisition.

Criteria for Interpreting Findings and Method of Analysis

Surveys will be used with a numbered scale to easily quantify answers.
Having a numbered scale will make statistical analysis possible and more

conclusive. Interviews of members of management will be more qualitative and can

be used to support findings and to add to the discussion section of this case study.
The questions of the interviews will be heavily influenced by the study done by
Wagner and colleagues (261). All information gathered will be linked to answering
the three study questions set forth by this case study.

Annotated Bibliography
Harris, R., & Robinson, C. (2002). The Effect of Foreign Acquisitions on Total Factor
Productivity: Plant-Level Evidence from U.K. Manufacturing, 1987-1992. The Review of
Economics and Statistics, 84(3), 562-568.

The purpose of this study was to compare foreign invested and owned plants
to non-foreign invested and owned plants in the United Kingdom to see if there was
a difference in productivity. The variables examined were whether or not the
companies were solely owned by U.K entities or foreign entities. The method used
compared the performance of these groups on the basis of their total factor
productivity (TFP) levels which is described within the paper. The study is based on
individual plants within the Annual Business Inquiry Respondents Database (ARD).
There were many minor observations that couldnt be proven with any definitive
statistical evidence but, it was stated that between 1987 and 1992 plants operating
in the UK manufacturing sector that were acquired by a foreign organization were
on average 41% more productive.

Vermeulen, Freek, and Harry Barkema. "Learning through Acquisitions." The Academy of
Management Journal 44.3 (2001): 457-76. Print.

The authors of this study examined the effect of greenfields and acquisitions on
future success of businesses. Greenfields are defined as setting up a subsidiary from scratch while
acquisitions are defined as the takeover of an existing company. More specifically this study tested
the survival of future acquisitions and greenfields based on the firms preceding amounts of
greenfields and acquisitions. A sample of the 25 largest nonfinancial companies on the Amsterdam
Stock Exchange at the end of 1993 were used in this study. After analyses of the collected data was
complete, conclusions were made. The authors found that a focus on internal growth through
greenfields diminishes the survival chances of a firms later ventures. The study also found evidence
that acquisitions help to prevent and resolve rigidity by possibly increasing the firms
knowledgebase. Overall this study supports the idea that acquisitions help the survival of a firms
future endeavors.
Paruchuri, Srikanth, Aul Nerkar, and Donald Hambrick. "Acquisition Integration and
Productivity Losses in the Technical Core: Disruption of Inventors in Acquired Companies."
Organization Science 17.5 (2006): 545-62. Print.

The purpose of this study was to test the hypotheses that acquisition
integration disrupted corporate scientists productivity and affected certain
scientists more than others. The variables being tested were the correlation of
successful patent applications by scientists in the pharmaceutical field before and
after acquisition integration. This was chosen because in the pharmaceutical field
most any invention that is made will be patented and is a good measure of
productivity within that field. In total there were 63 acquisitions of pharmaceutical
companies that actively applied for patents and this yielded 3,933 inventors. The
study then analyzed the amount of patents applied before and after acquisition and
drew some conclusions. It was found that acquisition integration had a negative
effect on productivity. It was also found that integration was especially damaging to

inventors who expertise was different than that of the acquiring company and to
inventors that were socially embedded in collaborative relationships with their preacquisition colleagues. Two more interesting points the study found was that a loss
of standing by an inventor caused a decline in productivity but, that was not linked
with acquisition integration. The other point was that by addressing the inventors
whose skill did not align with the acquiring companys main expertise seemed to
cause the loss of productivity to disappear.
Georgiades, Georgio, and Stavros Georgiades. "The Impact of an Acquisition on the
Employees of the Acquired Company." Journal of Business and Economics 5.1 (2014): 10112. Print.

The overall purpose of this study was to find the differences of what
academics think compared to what managers think in relation to the impact on
employees of an acquisition. This study examined three main variables: Managers
views concerning the management practices in relation to the acquisition,
managers views concerning the way the employees personal circumstances are
affected after an acquisition, and managers views concerning the way the
organizational environment is affected by an acquisition. These were studied by
interviewing 4 different managers from the acquired company and 4 different
managers from the acquiring company. The results are as follows. Generally
employees do not want to go through acquisitions and many believe that top
managers did not take into account the human factor when acquiring the company.
There was a lack of communication that caused stress and anxiety as some did not
know if it was a merger or an acquisition. Many senior managers of the acquired
company felt little incentive to stay and left to form their own company. Many
employees of the acquired company felt that unknown people were pulling the

strings and they did not know why they were making the decisions they did. The
benefits offered from the acquiring company persuaded employees to look more
favorable upon the acquisition. Many employees went with the crowd and felt
negative about the acquisition but, this eroded with time. Some employees felt a
loss as if they had to give up part of all they worked for and there was stress about
if they would keep their job. This caused some employees to detach from their
responsibilities and work less hard. The acquiring company was more bureaucratic
and there was a loss of family feeling by the acquired employees adding to
insecurity and motivational problems. It was also noted that there was a lack of
training to convert to the new system.
Hambrick, D., & Cannella, A. (1993). Relative Standing: A Framework for
Understanding Departures of Acquired Executives. Academy of Management, 36(4), 733-762.
Retrieved from http://www.jstor.org/stable/256757

This study was done to further explain why some acquired executives depart.
The variables investigated were: executive departure, reacquisition performance,
relative size, social climate, removal of autonomy, status bestowal, age, relatedness
of firms. The method used was a statistical method that took 97 acquired firms
involving 430 acquired executives and analyzed the variables states previously and
if they affected their departure or not. After all the data was analyzed conclusions
were drawn. It was shown that the further the gap was between the acquiring
company and the acquired companys performance was led to acquired executives
to depart at a greater frequency. This could be due to feelings of inferiority. It was
also shown that executives who lost their autonomy departed more often, but if
given an enhancement in the acquiring company they were less likely to depart. If
their colleagues were given enhancements and they were not, then that executive

was more likely to leave. It was also shown that older executives tended to depart
more often when being acquired than younger executives. A surprise to the authors
was that the greater the difference was in relatedness of the two firms the greater
the departure rate was of the acquired executives. This may be due to a cultural
gap that causes a strain. Lastly, it was observed that the departure of executives
can be expected to happen immediately but, will most likely last up to four years
after the acquisition.

Wagner, Bruno, and Adriana Victoria Garibaldi De Hilal. "The Human Factor: A
Successful Acquisition in Brazil." Management Research Review 37.3 (2014): 261-87. Print.

The purpose of this case study was to identify how the human factor
influenced the acquisition of a cement factory in Brazil. The variables that were
investigated included: resistance to change, employee expectations, employee
uncertainty, stress, employee turnover and retention. The method of choice for this
study were to conduct in depth interviews with employees of the acquired cement
factory and executives of the acquiring organization. The conclusion was mostly
qualitative but, it was found that this acquisition was deemed a positive event for
the both the companies and the employees. There were several reasons given. One
reason is that the employees of the acquired cement factory did not feel part of the
original company they worked for before being acquired. The acquiring company
had open communication and held 4 face to face meetings with the employees. It
was noted the employees were scared about losing their jobs but, the acquiring
company developed employees through training and introduced an ethical code of
conduct and this helped alleviate concern as well as distrust of the acquiring
company. There is also data that shows the acquiring company invested into

bringing more employees to the factory and production increased nearly double
within thirty days after the acquisition was implemented. Even with all of the
positives listed there were still some employee turnover but, was less than
predicted. It was also noted that the acquiring company tried to adapt their
managerial style to a way that the factory employees were used too. This study had
shown that integrations can be successful on nearly all fronts and some of the
tactics used.
Bruton, Garry, Benjamin Oviatt, and Margaret White. "Performance of Acquisitions of
Distressed Firms." Academy of Management 37.4 (1994): 972-89. Print.
This study was done to find what factors had positive effects on business acquisitions of
distressed firms. This study defined a distressed firm as one that had two consecutive years of
declining income and return on investment. Three hypothesis were tested. Hypothesis 1 states
related acquisitions of distressed firms perform better than unrelated acquisitions of distressed firms.
Hypothesis 2 states prior acquisition experience is positively associated with performance of
acquisitions of distressed firms. Hypothesis 3 states the ratio of acquired firm size to acquirer firm
size has a curvilinear association with the performance of acquisitions of distressed firms, with the
poorest performance occurring when the ratio is very low or very high. A sample of firms was
collected from the 1988 COMPUSTAT research file and narrowed down to 51 firms while a control
group of non-distressed acquired firms was selected and was comprised of 46 firms. A panel of 3
faculty members from 3 different universities rated the acquisitions based off of acquisition
performance. If 70% of the acquiring firms revenues were related to the acquired firm then those
firms were considered to be related. After analyzing the results here is what the authors concluded.
Hypothesis 1 and 2 were supported but, hypothesis 3 was not. Related acquisitions of distressed
firms performed better than unrelated acquisitions. Also firms with prior acquisition experience
performed better than those without. The size of the firms did not have any significant differences.
The authors hint that the third hypothesis may be inconclusive due to low sample size.

Sorescu, A., Chandy, R., & Prabhu, J. (2007). Why Some Acquisitions Do Better than Others:
Product Capital as a Driver of Long-Term Stock Returns. Journal of Marketing Research,
44(1), 57-72.
The authors of this study acknowledged the study is different than most papers because they
examine which firms are better positioned to acquire in the first place instead of how to acquire firms.
The study is mostly based off of looking at the variable product capital which is defined as the
product development and product support assets that a firm has. Three hypothesis were tested in
this study. The first states that firms with higher product capital select acquisition targets with greater
innovation potential than do other firms. The second states firms with higher product capital deploy
the innovation potential of targets more extensively than do other firms. The third hypothesis states
firms that deploy the innovation potential of targets more extensively create higher long-term
shareholder value than do other firms. These hypotheses were tested by using data from the
pharmaceutical industry which was used due to their tendency of frequent acquisitions. The data
was taken from the Security Data Company Thomson Mergers and Acquisitions database which
covers both U.S. and foreign firms. The sample was comprised of a total of 238 acquisitions. The
variables: selection and deployment of targets, unanticipated deployment, and product capital were
examined to determine their effect on long-term financial performance. Target selection was
assessed by measuring innovation potential of the targets to be acquired which is based on products
and product development personnel. The extent of deployment was measured by measuring the
extent to which acquires realized the innovation potential of the target post-acquisition. The
realization of this was based off of product deployment after acquisition and the retention of top
scientists in the acquired firm. Product development was measured by using present and past levels
of R&D expenditures. The results supported all three hypotheses. The greater the product
development and support assets of the parent, the greater the innovation potential of the target
selected is. The better the innovation potential of the target selected, the more extensive the
deployment of this potential is. Also, unanticipated deployment has a positive effect on performance.

Datta, Deepak. "Organizational Fit and Acquisitin Performance: Effects of Post-Acquisition

Integration." Strategic Management Journal 12.4 (1991): 281-297. Print.
This study was done to examine the differences of acquiring and acquired firms on postacquisition performance. The study conducted used 173 acquired firms valued at 1 million dollars or
more in the U.S. manufacturing sector. Questionnaires were sent to higher up executives to evaluate
and test 6 different hypotheses that distinguish between firms that underwent heavy integration and
low integration. In order to test these hypotheses several variables were looked. Differences in
management style was measured using an adapted version of instrument developed by Khandwalla
(1977). Differences in reward and evaluation systems was measured using a scale identified by Kerr
(1982) that was based on a 5 point scale. Post-acquisition integration was measured by measuring
various manufacturing/R&D and marketing activities. Relative size was between the acquired and
acquiring firms were measured as a ratio of the sales of the acquired firm to that of the acquiring firm
in the year before the acquisition. Lastly, acquisition performance was also measured by five
performance criteria: ROI, EPS, stock price, cash flow, and sales growth. After analyzing the
questionnaires that were sent back conclusions were drawn. Evidence supports that differences in
top management style and post-acquisition performance are negatively related across all
acquisitions. There was also a negative relationship between differences in management style of the
firms that had both low and high post acquisition integration. Surprisingly there was no significant
negative relationship between differences in the reward and evaluation systems and acquisition
performance in the highly integrated firms but. It was expected and held true that there was no
significant relationship between differences in the reward and evaluation system and acquisition
performance of low integrated firms.
Kusewitt, John. "An Exploratory Study of Strategic Acquisition Factors Relating to
Performance." Strategic Management Journal 6.2 (1985): 151-69. Print.
This study examined 7 factors related to acquisition strategy and how it affected long run
financial performance of acquired firms. The seven factors were: relative size, acquisition rate,

industry commonality, timing, type of consideration, acquire profitability, and price paid. This study
was a statistical analysis of historical data of 138 relatively large acquiring firms between 1967 and
1976. The FTCs Statistical Report on Mergers and Acquisitions was used to obtain the data. The
authors hypothesized that each of the seven factors is directly related to the post-acquisition
financial performance of the acquiring firm. It was also hypothesized that here is an optimum
relationship between relative size, acquisition rate, and asset acquisition rate to financial
performance of acquiring firms. A third hypothesis stated that stock exchange acquisitions are
associated with greater performance in periods of high markets, and cash acquisitions are
associated with greater performance if made in periods of low markets. The final hypothesis
basically states that the seven factors working together have an effect on the acquiring company.
After analyzing the data the results uncovered all of the factors except price paid were related to
performance. Industry commonality and acquire profitability were positively related while relative
size, acquisition rate, timing relative to the market cycle, and percentage cash acquisitions were
negatively related to performance. The authors were surprised that cash acquisitions and
acquisitions made during high market activity were negatively correlated. The hypothesis of an
optimum relationship between relative size, acquisition rate, and asset acquisition rate to financial
performance of acquiring firms was not fully supported. It was found that relative size and acquisition
rate factors operate together significantly. There was no statistical evidence found to support the
hypothesis that stock exchange acquisitions are associated with greater performance in periods of
high markets, and cash acquisitions are associated with greater performance if made in periods of
low markets. The final hypothesis was accepted and the evidence supports that the seven
acquisition factors work together to have an effect on acquiring and acquired firms rather than just
internal operations.
Guest, Paul. "The Impact of Mergers and Acquisitions on Executive Pay in the United
Kingdom." Economica 76.301 (2009): 149-75. Print.

The author of this paper examined the impact of acquisitions by United Kingdom acquirers
on executive pay. The author tested the relationship between top executive compensation and
acquisitions. This was done using statistical analysis of UK firms from a database from various
periods. After examining the data a few conclusions were drawn. The study gave evidence that top
executive pay increases in the year after acquisition but, the increase is offset by a similar decline
two years after acquisition. On average there were no differences in pay between public and private
acquisitions. There was a significant increase in pay in cross-border acquisitions when international
exposure was important. Data also shows that acquirers that are paid more following an acquisition
are more likely to carry out large future acquisitions, but when a wealth-destroying acquisition occurs
a decline in CEO share value is believed to inhibit the incentive of CEOs to acquire non profitable
outcomes.

Laamanen, Tomi, and Thomas Keil. "Performance of Serial Acquirers: Toward an Acquisition
Program Perspective." Strategic Management Journal 29.6 (2008): 663-72. Print.
This study was done to analyze serial acquiring firms and the affect they have on acquired
firms. There were five hypotheses tested. The first hypothesis stated that a high acquisition rate is
negatively related to acquirer performance. The next hypothesis stated that a high variability of the
acquisition rate is negatively related to the acquirers performance. The authors also hypothesized
that an acquirers prior acquisition experience moderates the effects of the rate of acquisitions and
its variability of an acquirer performance. Another hypothesis read that an acquirers size reduces
the negative effects of the rate of acquisitions and its variability on acquirer performance. The final
hypothesis set forth stated the breadth of the acquisition program scope strengthens the negative
effects of acquisition rate and its variability on acquirer performance. To test these hypotheses the
Thomson Securities Data Corporation Platinum database was used to compile data on 5518
acquisitions of both public and private firms in the U.S. The dependent variable used was acquirer
performance. The independent variables used were acquisition rate, variability of the acquisition

rate, acquisition experience, acquirer size, and acquisition program scope. When these variables
were analyzed and compared to acquirer performance results were drawn. The first two hypothesis
were supported. It was found that both acquisition rate and variability negatively affected
performance. The authors were surprised to see that a negative effect was observed when
acquisition rate was compared to acquisition experience, however there was support that firms with
more acquisition experience can better deal with acquisition variability. This information partially
supported their hypothesis. Another result supports that larger acquirers are able to acquire at a
higher rate and with more variability. This supported another hypothesis. Lastly, the study found
evidence suggesting that the expanding industry presence of the acquirer decreases an
organizations ability to perform acquisitions at a high rate.