These slides walk students through the importance of examining mergers and acquisitions, a very popular corporate strategy to grow and gain synergies, from a marketing-angle.

1. Despite Efficiencies, M&As
Reduce Firm Value by Hurting
Customer Satisfaction
From: Umashankar, Bahadir & Bharadwaj (2021)

2. From: Umashankar, Bahadir & Bharadwaj (2021)
Despite being common, most M&As fail
Kmart acquired Sears for
$11 billion. Revenue
dropped by more than
10 percent.
Quaker acquired Snapple
for $1.7 billion. 2 years
later, Quaker sold Snapple
for $300 million.
AT&T acquired Time
Warner for $109
billion. Decided to spin
it out 2021.

3. From: Umashankar, Bahadir & Bharadwaj (2021)
M&As Negatively Affect
the Customer
As part of an M&A, the customer may…
• Lose status
• Lose access to favorite brands and
products
• Face changes in loyalty programs
• Lose established customer relationship
personnel
• Deal with new rules and processes
Does this have effects on the success
of the M&A?

4. From: Umashankar, Bahadir & Bharadwaj (2021)
Our Central Thesis
M&As Cause
Executives to pay
less attention to
customers than to
financial issues
Less attention to customers
Causes customer-
facing activities to
get less priority
Customer dissatisfaction
Which lowers firm
value

5. From: Umashankar, Bahadir & Bharadwaj (2021)
Net Effect of Customer Satisfaction &
Firm Efficiency on Firm Value in M&As
M&A vs. Non-M&A
Firms
Customer Satisfaction
Firm Efficiency
Firm Market Value
Compared to non-M&A firms, M&A Firms’ market value decreased by 2.43%
($481 million for the average firm) in the year following an M&A.
-1.14%
+.29%
+2.21%
+.83%

6. From: Umashankar, Bahadir & Bharadwaj (2021)
Why Does Customer Satisfaction
Decline Post-M&A and So What?
M&A Firms
Non-M&A Firms
0.25
0.26
0.27
0.28
0.29
0.3
0.31
0.32
Two Years Before
the M&A (t-2)
One Year Before
the M&A
(t-1)
M&A Year
(t)
One Year after the
M&A
(t+1)
Relative
Customer
Words/Finance
Words
Executives at M&A firms
(vs. non M&A firms) tend
to pay less attention to
their customers one year
after the M&A

7. From: Umashankar, Bahadir & Bharadwaj (2021)
Having Marketing Leadership Prevents
Declines in Customer Satisfaction
Customer
Satisfaction
+2.85%
Firm Market
Value
0 MROB 1 MROB
+4.28%
0 MROB 1 MROB
Having a marketing representative on the board of the firm (MROB) increases
customer satisfaction by 2.85% and market value by 4.28%