Watch these videos regarding Federal Acquisition Process.Link: Link: After watching these videos, reflect upon the federal acquisition process and then research some aspect of the federal acquisition process. For this paper, you will need to find an article in the library that relates to any aspect of the federal acquisition process and summarize and discuss the article in the required paper. Feel free to compare your article to which aspect of a Smores and remember to include a link to the article.Write a two-page paper, plus the title page and a reference page. As always, read all the lesson notes in Week 2 before you start this assignment as new or current events may have been updated since the start of class.Instructions:
•Written communication: Written communication is free of errors that detract from the overall message.
•APA formatting: Resources and citations are formatted according to APA (6th edition) style and formatting.
•Length of paper: typed, double-spaced pages with no less than a two-page paper.
•Font and font size: Times New Roman, 12 point.
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Assignment 1
Watch these videos regarding Federal Acquisition Process.
Link: https://youtu.be/PBf4pduLgzo
Link: https://youtu.be/3k1qB-y0NFg
After watching these videos, reflect upon the federal acquisition process and then research some
aspect of the federal acquisition process. For this paper, you will need to find an article in the
library that relates to any aspect of the federal acquisition process and summarize and
discuss the article in the required paper. Feel free to compare your article to which aspect
of a Smores and remember to include a link to the article.
Write a two-page paper, plus the title page and a reference page. As always, read all the lesson
notes in Week 2 before you start this assignment as new or current events may have been updated
since the start of class.
Instructions:
•Written communication: Written communication is free of errors that detract from the overall
message.
•APA formatting: Resources and citations are formatted according to APA (6th edition) style and
formatting.
•Length of paper: typed, double-spaced pages with no less than a two-page paper.
•Font and font size: Times New Roman, 12 point.
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1746-8809.htm
IJOEM
12,2
The pre-acquisition process
The temporal hiatus between the
announcement and completion in
foreign acquisitions in Brazil
400
Manuel Portugal Ferreira
Graduate School of Management, Universidade Nove de Julho,
São Paulo, Brazil and
Instituto Politécnico de Leiria, Morro do Lena,
Alto do Vieiro, Leiria, Portugal
Received 17 September 2015
Revised 27 April 2016
Accepted 5 May 2016
Felipe Borini
Escola Superior de Propaganda e Marketing Programa de Mestrado e Doutorado
em Gestão Internacional and FEA, University of São Paulo, São Paulo, Brazil
Simone Vicente
Graduate School of Management, Universidade Nove de Julho,
São Paulo, Brazil, and
Martinho Ribeiro Almeida
University of São Paulo – FEA, São Paulo, Brazil
Abstract
Purpose – The purpose of this paper is to focus on the pre-acquisition process and, specifically, how the
complexity involved in the transaction may drive the temporal gap between the formal announcement and
the completion of the deal. The authors emphasize the time (in days) between announcement and completion.
Design/methodology/approach – The empirical setting consists of the cross-border acquisitions (CBAs) of
Brazilian firms by multinational corporations announced between 2008 and 2012. Using a sample of 741
acquisitions, the authors examine how institutional (cultural and regulatory) and technological complexity
and the predictable mitigating effect of prior acquisition experience in Brazil all impact on the time needed for
evaluating the target and negotiating.
Findings – The results show that these complexity factors do matter for hastening the process and that
recent experience with acquisitions in Brazil shortens the time needed to completion.
Originality/value – This study contributes to the literature on the acquisition process and the uncertainty
and complexity factors in CBA in an emerging economy.
Keywords Brazil, Mergers and acquisitions, Institution-based view, Acquisition experience,
Acquisition complexity
Paper type Research paper
International Journal of Emerging
Markets
Vol. 12 No. 2, 2017
pp. 400-414
© Emerald Publishing Limited
1746-8809
DOI 10.1108/IJoEM-09-2015-0184
Introduction
The worldwide wave of mergers and acquisitions (M&A) of the last two decades has also
been observed in Brazil. Between 2001 and 2013 there were about 7,800 M&A in Brazil
(PriceWaterhouseCoopers, 2013). Some of these were recorded in the press because of the
sheer size of the operations – such as the acquisition of the North American companies
Tyson Foods and Pilgrim’s Pride by JBS – or because firms entered a spiral of M&A that led
to the emergence of large multinationals in their industries – such as AmBev, Gerdau and
J&F (controller of the JBS Group). Yet, although M&A have become popular strategies for
growth among top managers, there is little knowledge on one facet of the process prior to the
M&A (Very and Schweiger, 2001; Dikova et al., 2010): the temporal hiatus between
announcement and completion. That is why in some instances the process of evaluation of
the target firm and the negotiation prior to completion are prolonged for days, months or
even years, while in other instances the period after signing the initial M&A agreement is
very short (an exception in Dikova et al., 2010).
Albeit the effects on firms’ performance (Bortoluzzo et al., 2014) and the difficulties of
integrating a new firm (Capron and Pistre, 2002; Dyer et al., 2004) are relevant, it is possible
to better understand M&A by analyzing the pre-acquisition process, including the temporal
hiatus between the formal announcement of the intent to acquire and the completion of the
deal (including the abandonment of the decision to acquire) (see also Dikova et al., 2010).
This temporal hiatus is likely to reflect the complexity involved in undertaking acquisitions,
that may originate from government intervention (Pablo, 2009; Rasiah et al., 2010; DuBois
and Primo, 2016), judicial decisions (Hotchkiss et al., 2013), difficulties of evaluating the
target firms (for instance due to technological complexity) differences in the institutional
and regulatory frameworks of the countries, among other problems.
In this study we examine the temporal hiatus, or time duration, between the formal
announcement of a cross-border acquisition (CBA) and the finalization of the deal. In a
quantitative study based on secondary data we tested how institutional and technological
complexity and the effect of prior acquisition experience (commonly referred to as
acquisition capability) may produce a longer temporal hiatus between announcement and
completion. The data were collected from the Securities Data Corporation Platinum
(SDC Platinum) – M&A, giving a final sample of 741 acquisitions of Brazilian firms by
foreign multinational corporations (MNCs) from 36 countries, between 2008 and 2012.
The results show that CBAs of high technology firms and CBAs by foreign MNCs with
recent acquisition experience in Brazil have a shorter temporal hiatus between announcement
and completion. Moreover, the institutional barriers in more regulated industries tend to be
more complex and require more time to complete. Moreover, older acquisition experience in
Brazil contributes to extending the duration of the pre-acquisition process. This is interesting
insofar as it likely denotes two important dimensions: first, there are a number of institutional
hazards of operating in less institutionally developed countries that foreign MNCs learn
first-hand and reflect in future deals by being more cautious. Second, many emerging
economies, and Brazil specifically, have been going through substantial institutional
pro-market transformations (Cuervo-Cazurra and Dau, 2009; Cuervo-Cazurra and Stal, 2011;
Dau, 2016) opening their frontiers to foreign investors and modernizing the infrastructures.
This means that to at least some extent the country presents fewer hazards than in the past.
In this instance, recent experience in the country is likely to provide a more accurate
perspective on the current barriers, hazards and complexities.
This study follows extant literature on the complexity that may underlie CBAs, the effect
of acquisition capabilities and the impact of different institutional dimensions and
differences between countries. There are implications for practice given that longer time
spent in the pre-acquisition process entails added costs – for example, management costs,
negotiation costs, costs with auditing and loss of managerial focus from other activities.
Thus, it is pertinent to understand the process of pre-acquisition and delays in completing
the deal.
Conceptual development and hypotheses
CBAs are distinct from domestic acquisitions since they involve firms in different countries
and are likely to impose a set of additional difficulties, or barriers, that need to be
anticipated. These may include the cultural and economic differences (Stahl and Voight,
2004) that may increase the costs of the acquisition itself and of the integration
post-acquisition (Morosini et al., 1998; Dyer et al., 2004). In fact, a large number of studies
based on institutional theory have sought to understand how the differences between
countries impact performance of the acquisitions and of the firms post-acquisition
(Brouthers and Brouthers, 2000; Luo and Tung, 2007; Dikova et al., 2010).
The preacquisition
process
401
IJOEM
12,2
402
Albeit the extant research is abundant on the motives and determinants for undertaking
domestic and foreign acquisitions (for in-depth literature reviews see Shimizu et al., 2004;
Cartwright and Schoenberg, 2006; Barkema and Schijven, 2008; Ferreira et al., 2014), one stage of
the acquisition process that has been little explored is the delay between announcement and
completion. The acquisition process (Figure 1) originates with the decision to acquire and the
evaluation of potential target firms. The process unfolds, usually protected by confidentiality
agreements, with the acquiring firm receiving additional information until it releases a formal
announcement of the intent to acquire. The next step is that both seller and buyer initiate
negotiations (Hotchkiss et al., 2013) until a decision is reached that may be either completing the
acquisition or abandoning it (Dikova et al., 2010). This period of getting additional information,
assessing risks and synergies, negotiating the terms of the deal, may last for months or even
years, extending the temporal hiatus between the formal announcement and the actual
completion of the deal. Holding new information, the acquiring firm may identify additional risks
(Hsieh and Walkling, 2005) and abandon the deal despite the costs already incurred. Dikova et al.
(2010) noted that about 25 percent of the acquisitions announced were later abandoned.
The time duration of the evaluation and negotiation of the target firm is relevant, due to the
costs incurred and the opportunity costs of not pursuing other alternatives. It is likely that the
temporal hiatus may be a signal that the deal involves greater risk and greater complexity
(Meyer and Altenborg, 2008). Although there are numerous sources of complexity – firm,
business and country specific – Dikova et al. (2010) noted that the institutional differences
between home and host countries of the investors increase the complexity and make it harder
to promote an adjustment between the two firms. At the industry level, it is likely that the
negotiation will involve more complexity in more regulated industries. Other sources of
complexity may pertain to the technology, either because it is difficult to evaluate the
knowledge, or because it is necessary to assess the impact of integrating different technologies
and the potential synergies. One of the hazards involving acquisitions – more crucial when
acquiring high technology/knowledge firms – is the loss of key personnel (Dyer et al., 2004).
In sum, we propose that the factors of complexity, risk and uncertainty that intervene in
acquisitions will tend to prolong the temporal hiatus between the formal announcement of the
acquisition and reaching a final decision.
However, prior experience with acquisitions (or the competence developed in acquiring – the
acquisition capability) (Hayward, 2002; Barkema and Schijven, 2008) may contribute to lessen
the time duration in two important manners. First, prior acquisition experience improves the
ability to evaluate potential target firms, and second, when this experience is in the same
country, it is likely to provide the acquiring firms with at least some understanding of the local
institutional idiosyncrasies (Rottig, 2016). These arguments are combined in the conceptual
model shown in Figure 2.
Institutional distance and complexity
The national boundaries between countries are also indicative of economic, social, political,
demographic, geographic, legal and cultural dimensions that differ among countries and
Evaluation of
opportunities for
acquisitions
Figure 1.
Stages of the
acquisition process
Evaluation of a
specific target firm
and conditions
Acquisition
announcement
Management
model and
integration of firms
Completion
or
abandonment
Source: Adapted from Dikova et al. (2010)
Cultural distance
(home-host country)
Regulatory complexity
Technological complexity
(high technology)
The preacquisition
process
H1 +
H2 +
H3 +
Time between
acquisition
announcement
and final
decision
(completion or
abandonment)
403
H4 –
Prior (recent) experience
with local acquisitions
comprise the national institutions (North, 1990; Berry et al., 2010). Institutions exist to
regulate the activities and interactions among individuals, setting the norms, rules, codes,
laws and contracts that guide behaviors (North, 1990). MNCs perceive the institutional
differences on a large spectrum of institutional dimensions that are specific to each country
(Rottig, 2016) in which they operate. It is less likely that CBAs occur between firms from
countries with large institutional differences, because of the perceptions of uncertainties and
risks of expropriation, contracts renounced by governments, legal barriers, specific cultural
dimensions, among other problems (Dikova et al., 2010).
A major facet of institutional complexity for firms pertaining to how countries differ is
related to the cultural identities (Hofstede, 1980; Berry et al., 2010). A number of
characteristics of the countries are rooted in the cultural heritage, including such aspects as
individuals’ and firms’ behaviors, organizational structures, resistance to foreign ownership,
social reputation, transparency and disclosure of information. Morosini et al. (1998), for
example, analyzed how cultural differences influenced acquisitions’ performance, arguing
that cultural distance between countries reveals differences in norms, repertoires, traditions
and folklores, and many aspects of managing. These differences increase the costs and
uncertainties of contracting in CBAs.
In culturally dissimilar countries, such crucial aspects for the CBA as learning about the
target and the specific regulatory framework may be difficult and conflicts may arise.
In sum, cultural differences extend the time, or delay, and effort required to obtain reliable
information, acquire trust, negotiate and mitigate potential post-acquisition conflicts that
may emerge in integrating the firms (Dyer et al., 2004):
H1. The cultural distance between the home country of the foreign investor firm and
Brazil is positively related to the time duration between acquisition announcement
and completion.
In addition to the effect of cultural distance on the delay between the acquisition
announcement and completion, other sources of complexity and uncertainty are likely to
arise. Industry-specific regulatory and administrative barriers may be substantial
institutional hurdles to overcome. Some industries are subjected to greater scrutiny by
the regulatory agencies and may present greater complexity than others. The extent of
regulation varies across industries and countries. For instance, in the USA, the healthcare
and financial services appear among the most regulated (The Economist, 2007). Many
emerging economies rely strongly on their pool of natural resources, for instance, in Brazil
the state-owned oil company – Petrobras – accounts for about 10 percent of the country’s
GDP, the mining industry for about 3 percent, and combined oil and mining represent about
one third of Brazilian exports. These activities tend to endure greater regulation and a set of
Figure 2.
Conceptual model
IJOEM
12,2
404
coercive norms by the regulatory agencies (Baioco et al., 2013). Other highly regulated
industries include the telecommunications, water, forestry and some sectors of agriculture
such as biofuel (energy). Attending to the rules and laws, both international and of the host
country, MNCs may require a longer period of time to formalize the contract (Todeva and
Knoke, 2005).
Environments that are more regulated and administratively more complex create
situations that may inhibit the acquisition (Vermeulen and Barkema, 2001). In designing the
acquisition contract it is necessary to include clauses that deal with, for instance,
the administrative details of the transaction, the legal procedures and the acquisition itself
including knowledge transfer and other components (Dikova et al., 2010). Hence, in more
regulated industries we may expect a longer temporal hiatus between the announcement
and the finalization of the acquisition:
H2. The regulatory complexity of operating in more regulated industries is positively
related to the time duration between acquisition announcement and completion.
Technological complexity
One of the motives pertaining to acquisitions is the access to novel knowledge and
technologies (Vermeulen and Barkema, 2001; Luo and Tung, 2007; Zou and Ghauri, 2008;
Phene et al., 2012). Countries have distinct technological competencies (Anand and Kogut,
1997) that MNCs seek to access and transfer internally among their networks of subsidiaries
(Vermeulen and Barkema, 2001) to augment their pool of competences. Zou and
Ghauri (2008), for instance, argued that when the external knowledge is complementary to
that already held, it will be easier to understand and use. However, much of the knowledge is
tacit, difficult to codify, transfer or absorb (Cohen and Levinthal, 1990; Dyer et al., 2004).
Cohen and Levinthal (1990) noted that in order to learn, MNCs need to have absorptive
capacity – that is, the ability to recognize the value of the knowledge, and then the ability to
apply and commercialize the knowledge.
In CBAs in more knowledge intensive industries, it is likely that evaluation concerns emerge
requiring additional information on the value and transferability of the target firm’s knowledge.
Recognizing, learning and applying will be more complex and uncertain for technologies
unknown to the acquiring firm. Reliable information is thus crucial. The institutional voids,
the opaqueness that characterize emerging economies (Cuervo-Cazurra and Genc, 2008), despite
the substantial pro-market reforms (Cuervo-Cazurra and Dau, 2009; Dau, 2016), raise
uncertainties concerning the quality of the information received. Finding reliable information,
scrutinizing the true value of the resources and reaching an agreement in more complex high
technology, or knowledge intensive, industries is thus likely to require a longer period of time:
H3. The technological complexity involved in the acquisition is positively related to the
time duration between acquisition announcement and completion. Specifically, the
acquisition of high technology target firms will probably have a longer temporal hiatus.
Acquisition experience
The international business literature is abundant in pointing out that firms may develop
a competency in conducting acquisitions (Hayward, 2002; Ferreira, 2007; Phene et al., 2012).
In essence this means that firms that make acquisitions will gradually get better at
evaluating each potential acquisition in what concerns the target firm, the synergies,
but also the many sources of uncertainty. Although each acquisition deal is distinct,
research has shown that firms may benefit from their prior experience undertaking
acquisitions, since they are able to apply what they have learned in one acquisition to the
next (Vermeulen and Barkema, 2001; Barkema and Schijven, 2008). In essence this ability
means that firms develop internal procedures on how to carry out acquisitions, learn how to
interact with local agents …
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