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Government Regulators

Regulators have a high level of power over the completion of any deal, but likely have low interest in all but a minority of announced combinations. One way to strengthen regulatory resistance is to announce a deal as a fait accompli before or during the regulatory review process. The focus for this stakeholder group thus involves meeting conditions established by policy makers. Because regulatory requirements vary across the

Table 3.1. Prioritizing M&A Stakeholders

High Interest

Low Interest

High Power

Manage closely (regulators)

Keep satisfied (customers)

Low Power

Keep informed (employees)

Monitor (competitors)

nations comprising the European Union,54 the discussion here is limited to the review under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. This U.S. law requires that before most M&A transactions can complete, filings describing the proposed transaction and the firms involved must be submitted to the Federal Trade Commission and the Department of Justice. The rules, filing requirements, and associated fees are fairly complicated and interested readers can learn more at the Federal Trade Commission's Website.55 After filing for HSR review, there is generally a 30-day waiting period to allow regulators to review information and consider anticompetitive implications. During the waiting period, there are limits on data sharing and joint decision making between firms that are part of the acquisition. The regulatory review may be shortened or extended, but it must be satisfied before a transaction can close. Although most firms wait until the review is complete, firms can begin planning for integration sooner. One option is to use third parties, such as consulting firms, to perform needed analysis of joint data and provide relevant sum-maries.56 In doing so, companies need to ensure that incentives paid to advisors do not lead to higher costs.57

Regulatory reviews by other government bodies may also be required before an acquisition can complete. For example, the European Union can impact acquisitions of U.S. companies as illustrated by Intel having to make concessions to gain regulatory approval of its McAfee acqui-sition.58 The potential for additional regulatory reviews reinforces the need to consider regulatory issues and remedies as part of target selection, as any accommodations to gain regulatory approval will influence integration implementation. By anticipating regulatory reviews, firms can minimize planning delays. Firms with active acquisition programs or strategically important deals may want to establish a team dedicated to government relations or liaison with regulatory agencies. For example, AT&T has announced it will make concessions to regulators to complete an acquisition of T-Mobile. AT&T has a skilled team of 93 lobbyists in Washington, DC, and has spent $46 million in campaign contributions to both major U.S. political parties.5 9 The primary focus of successful acquirers during regulatory review is continuing integration planning while keeping government representatives informed and regulatory requirements satisfied.


A sometimes overlooked group that likely has high power and interest in an acquisition is customers of both acquirer and target firms; thus the concerns of customers need to be managed carefully. Acquirers often focus on internal issues during integration at the expense of external market is-sues.60 Having a short-term focus on integration planning can sacrifice long-term results that depend on serving customers. For example, customer service quality often declines during the turmoil surrounding an acquisition, and results in two-thirds of businesses losing market share following a merger.61 In contrast, an emphasis on creating value for the customer as part of an acquisition facilitates the building of trust between the customer and the new firm, reduces customer uncertainty, and lowers dissatisfaction and defection.62

In planning for integration, retaining customers may be more important to acquisition performance than reducing costs.63 Research suggests that acquisition performance suffers significantly from negative customer reactions.64 A lack of communication with customers to allay concerns can be expected to have consequences. For example, IBM cut its orders in half following the combination of two high-technology firms because no one communicated what the acquisition meant to this customer.65 Acquirers that remain committed to serving their customers and improving customer value as part of the integration will be more successful

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