Physical assets in the M&A mix: a strategic option

Abstract

Purpose

The purpose of this paper is to highlight how a commonly‐overlooked resource – physical assets – can be used to advantage as both a tactical and strategic tool during mergers and acquisitions (M&A). It aims to present an overview of strategies for managers to consider when faced with M&A – both for deterring and defending against unwanted acquirer attention, and for managing M&A post‐transaction.

Design/methodology/approach

Integrating findings from different research streams (e.g. financial, management, geography and real estate), and drawing on interviews and recent M&A reports, the paper distills physical asset strategies into a general overview and a two‐stage framework.

Findings

Firms' physical assets can play a significant role in driving, defending and managing M&A. By affecting both financial and organizational outcomes, it is shown how physical assets are a powerful strategic resource within the manager's toolkit. Deter‐and‐defend strategies reduce M&A vulnerability and defend against hostile raiders; Managing M&A strategies improve post‐M&A revenue generation, efficiency gains and increased organizational effectiveness.

Practical implications

For managers facing M&A, this paper highlights a range of strategic options which are often overlooked in M&A research. Beyond M&A, many of these strategies can also be used by any firm facing financial and performance pressures.

Originality/value

The paper highlights a category of M&A strategies that can have a significant impact on M&A outcomes, but is often underplayed in general management and strategy research. It elaborates on a range of strategy options. Also, by integrating findings from diverse research streams, this paper offers a broadened perspective of M&A strategies.

Citation

Cohen, L.M. (2010), "Physical assets in the M&A mix: a strategic option", Journal of Business Strategy, Vol. 31 No. 6, pp. 28-36. https://doi.org/10.1108/02756661011089053