How do serial acquirers learn from acquisition experience has been a prominent issue in the field of acquisition. However, the empirical findings about performance implications of acquisition experience have still been mixed. Drawing on the organizational learning theory, this study analyzes the influence of the quality, the pattern, and the context of acquisition experience on acquirer performance. Using a sample of 2223 firm-year observations gauged from 11,571 acquisitions conducted by 889 listed firms in the United States during the 2001–2014 period, this paper finds that (1) the portion of related acquisition experience has a non-significant effect on acquirer performance; (2) the relationship between the velocity of acquisition experience and acquirer performance is an inverted-U shape; (3) Target product-market scope positively moderates the relationship between the portion of related acquisition experience and acquirer performance; and (4) Target product-market scope positively moderates the relationship between the velocity of acquisition experience and acquirer performance. These findings echo an acquisition program view and suggest that a pro-active, plan-ahead acquisition trajectory benefits acquirer performance.
The topic of mergers and acquisitions (hereinafter, acquisitions) is one of the central themes of academic literature and of business practice. Over the past forty years, the market has witnessed a consistent stream of acquisitions, although the numbers and dollar values of such acquisitions fluctuate annually. The value of worldwide M&A approached 3.9 trillion US dollars during full year 2016, the third best record for worldwide deal making since 2007.1 Acquisitions offer various advantages such as efficiency gains (Avkiran, 1999) and the immediate access to external resources (Heeley, King, & Covin, 2006; Al-Laham, Schweizer, Amburgey, 2010). More and more firms frequently engage in acquisitions to achieve their growth strategy, such as Cisco, General Electric, Google, and Facebook (Laamanen & Keil, 2008; Schipper & Thompson, 1983). Rather than making an acquisition occasionally, these serial acquirers actively conduct streams of mutual interrelated acquisitions to fulfill their strategic goals (Hansell, Walker, & Kengelbach, 2014; Laamanen & Keil, 2008). However, the performance implications of cumulative acquisition experience have remained elusive (Muehlfeld, Rao Sahib, & Van Witteloostuijn, 2012) as learning from acquisitions involves causal ambiguity (Castellaneta & Conti, 2017; Lippman & Rumelt, 1982). Some studies found a positive relationship between acquisition experience and performance (Bruton, Oviatt, & White, 1994; Barkema, Bell, & Pennings, 1996), others found a U-shaped effect (Haleblian & Finkelstein, 1999), and others found a non-significant effect (Hayward, 2002; Wright, Kroll, Lado, & Van Ness, 2002; Zollo & Singh, 2004). For example, research has shown that routines arising from acquisition experience increase the likelihood of subsequent acquisitions (Collins, Holcomb, Certo, Hitt, & Lester, 2009; Haleblian, Kim, & Rajagopalan, 2006). However, learning curve effects from acquisition experience are not bound to happen (Hayward, 2002). Specifically, understanding why some acquirers are better at learning than others is still an active research area (Basuil & Datta, 2015; Cuypers, Cuypers, & Martin, 2017; Haleblian & Finkelstein, 1999; Hayward, 2002; Muehlfeld et al., 2012).