The present expert interview-based, qualitative analysis is motivated by the foregoing considerations and seeks to investigate: how companies use non-financial sustainability information in M&A to contribute to transaction success and how sustainability management is ensured in the acquired entity after the transaction. A particular focus shall be placed on the post-merger integration of sustainability controlling. The following chapter 2 explains terms and concepts relating to sustainability, sustainability controlling and the M&A process. Chapter 3 discusses the relevant research findings on the CSR business case and the CSR research in M&A. Subsequently, it identifies the research gap and derives the research questions. Chapter 4 answers the research questions by evaluating and discussing the results of the underlying expert interviews and derives implications for research and practice. Finally, chapter 5 concludes by depicting the key insights of the analysis.
Corporate Social Responsibility (CSR) has gained momentum in the last two decades as media reports on climate change, inhumane working conditions and environmental scandals have prompted the need to consider ecological and social perspectives when conducting business. One such example is the GREENPEACE campaign against NESTLÉ. NESTLÉ was accused of using palm oil in its KitKat production from the Indonesian palm oil supplier SINAR MAS which is known for rainforest clearing and the subsequent destruction of wildlife habitats. In light of the increasing disclosure requirements and scrutiny of corporate activity by various stakeholders, companies are being challenged to implement ecological and social concerns into their operations, i.e. sustainability management in order to secure the societal acceptance of the business, the so-called license to operate.
The need for sustainability management and the inherent sustainability controlling is further emphasised by the extensively researched CSR business case, i.e. the link between CSR and firm’s financial performance. A large body of researchers and practitioners acknowledge the value-enhancing capabilities of CSR, e.g. improvement of operating efficiency or positive impact on market returns. However, to unlock the full value-adding potential of CSR, systematic controlling is required to identify strategic value drivers, derive appropriate activities and implement instruments for measuring the impact of the activities.
Table of Contents
1 Introduction
2 Theoretical Background
2.1 Sustainability Controlling
2.1.1 Sustainability Terms
2.1.2 Definition and Objective
2.1.3 Organisation
2.1.4 Tasks and Processes
2.1.5 Instruments
2.2 Mergers & Acquisitions
2.2.1 Definition, Types and Objectives
2.2.2 M&A Process
2.2.3 Post-merger Integration of Controlling
3 Literature Review
3.1 Research on Sustainability and Economic Performance
3.2 Research on Sustainability in M&A
3.3 Research Gap and Research Questions
4 Empirical Analysis
4.1 Research Design
4.1.1 Basics of Qualitative Research
4.1.2 Data Collection
4.1.3 Data Analysis
4.2 Empirical Results
4.2.1 Integration of Sustainability Information into M&A pre-merger
4.2.1.1 Preparatory Phase
4.2.1.2 Transaction Phase
4.2.2 Integration of Sustainability Controlling post-merger
4.2.2.1 Objectives and Context
4.2.2.2 Organisation
4.2.2.3 Tasks and Processes
4.2.2.4 Instruments
4.2.2.5 Integration Barriers and Success Factors
4.2.2.6 Levels of Integration
4.3 Discussion and Implications
5 Conclusion
Objectives & Research Topics
This thesis examines the integration of non-financial sustainability information into the Mergers & Acquisitions (M&A) process and the subsequent implementation of sustainability controlling in the acquired entity. The primary research goal is to understand how acquirers leverage sustainability data to enhance transaction success and how they design post-merger sustainability management to ensure group-wide consistency.
- Integration of sustainability criteria during the M&A pre-merger phase.
- Role of sustainability in risk management and target selection.
- Implementation of post-merger sustainability controlling systems.
- Identification of integration barriers, success factors, and context-dependent challenges.
- Evaluation of qualitative expert insights regarding sustainability governance.
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4.2.1.1 Preparatory Phase
The questions concerning the preparatory phase aim to explore in which subprocesses of this phase acquirers use non-financial sustainability information, i.e. information about the potential targets’ ecological and social practices (henceforth “sustainability information” for easier readability), and what is the rationale behind such considerations. The interviewed experts report that sustainability information can be part of the basic strategy and candidate screening.
With regard to basic strategy, two experts explain that sustainability implications are being taken into account indirectly, i.e. they are seen as a side issue and not the primary strategic reason for taking on a M&A project. E3 states that the company’s strategic focus are horizontal acquisitions and in view of the inherent sustainability properties of the acquirer’s mail-order business model, the targets accordingly exhibit similar sustainability properties. E5 explains that it is important to acquire environment-friendly assets in transport and logistics in order to meet the clients’ expectations but the acquisition would not be pursued for the sake of sustainability by explicitly focusing on sustainable assets.
With regard to the candidate screening process, all experts make clear that sustainability information is not being incorporated actively into this step, but it is considered passively. This means that sustainability aspects are not part of the screening criteria. However, if sustainability related issues present themselves during the screening process, they are being investigated.
Summary of Chapters
1 Introduction: Provides an overview of the rising importance of Corporate Social Responsibility (CSR) in business operations and identifies the research gap regarding the integration of sustainability in M&A activities.
2 Theoretical Background: Defines key concepts including sustainability controlling, the M&A process, and the specific context of post-merger controlling integration.
3 Literature Review: Discusses existing research on the link between CSR, financial performance, and M&A success, leading to the formulation of two research questions.
4 Empirical Analysis: Outlines the qualitative research design, data collection via expert interviews, and presents the findings regarding pre-merger sustainability information usage and post-merger controlling integration.
5 Conclusion: Synthesizes the main findings, highlights practical implications for integrating sustainability into M&A, and acknowledges research limitations.
Key Words
Sustainability Controlling, Mergers & Acquisitions, M&A, Corporate Social Responsibility, CSR, Due Diligence, Post-merger Integration, Sustainability Management, Triple Bottom Line, Qualitative Research, Expert Interviews, Synergy Realisation, Risk Management, Sustainability Performance, Stakeholder Management
Frequently Asked Questions
What is the core focus of this research?
The thesis focuses on how acquiring companies integrate non-financial sustainability information into the M&A process and how they manage sustainability controlling in the acquired company post-merger.
What are the primary thematic areas?
The research explores two main areas: the use of sustainability data during the preparatory and transaction phases of M&A, and the design and implementation of sustainability controlling integration after the transaction.
What is the primary research objective?
The objective is to investigate how non-financial information contributes to transaction success and how sustainability management is rolled out to acquired entities to maintain group-wide standards.
Which research methodology is applied?
The study utilizes a qualitative research design based on semi-structured expert interviews with professionals in group finance, M&A, and controlling.
What is covered in the main section of the work?
The main section evaluates empirical results from expert interviews, focusing on pre-merger strategy, the due diligence process, post-merger organizational integration, and the specific instruments and tasks used for sustainability controlling.
What are the characterizing keywords of the study?
Key terms include Sustainability Controlling, M&A, CSR, Due Diligence, and Post-merger Integration.
How is the sustainability fit assessed during the M&A process?
Experts describe the sustainability fit as an assessment of the target's corporate philosophy and environmental/social performance to ensure group-wide standards are preserved or brought up to the acquirer's level.
Why is the pre-merger screening for sustainability often limited?
Experts noted that sustainability often has subordinate relevance at the early screening stage due to the prevalence of financial criteria, and that information about small and medium-sized companies is often not publicly available.
What role does the due diligence process play for sustainability?
Due diligence is identified as the central point for active and proactive investigation of environmental and social risks, such as pollution or labor law compliance, which then informs the post-merger integration planning.
- Quote paper
- Anastasia Harder (Author), 2020, Integrating Sustainability Aspects into the M&A Process, Munich, GRIN Verlag, https://www.grin.com/document/1189256
