Acquiring companies often adopt a myopic view of the acquisition process.
The typology proposed by Hambrick and Fukutomi (1991) of different CEO tenure stages may help to clarify the dilemma that acquiring companies face.
If the CEO's knowledge is considered to be valuable, this situation presents a dilemma that acquiring companies can hardly avoid.
The evolution of task knowledge and power through the five seasons therefore creates a challenge for acquiring companies.
Acquiring companies retain the owner and/or top executives because of their extensive tacit knowledge that the acquiring company does not have, and because that knowledge is very specific to them.
First, they highlight the significance of the knowledge residing in the owner and/or senior executives of acquired companies as a key asset that acquiring companies should secure.
Acquiring companies tend to retain acquired companies longer if both reside in the same industry (Porter, 1987; Ravenscraft & Scherer, 1987).
2] Conversely, acquiring companies that engage in higher numbers of acquisitions might have experiences that make them better at managing acquisitions than those engaging in fewer numbers (Haleblian & Finkelstein, 1999).
Acquiring companies that engage in higher numbers of divestitures might have strategies of buying-and-selling assets for profit, or may have entered a restructuring phase.
This variable was measured as the return on assets (ROA) for the acquiring companies for the years the acquired company was retained.
Moreover, the acquiring companies averaged 4 acquisitions and about 1.
If acquired company top executives are important to keep, yet some are going to leave, then which ones should acquiring companies try hardest to retain?