A Stakeholder Framework for Evaluating the Impact of Mergers and Acquisitions

The purpose of this chapter is to explain why ethical evaluation of the impact of a merger or acquisition matters, to place ethical evaluation of M&A in the wider context of knowledge of business ethics and corporate governance, and to develop and demonstrate a framework for evaluating the treatment of stakeholders during M&A. This contribution surveys the relevant governance, ethical and M&A literature. A new stakeholder framework is proposed and then applied to an important case study. We found that M&A has important consequences for a variety of stakeholders; the strategy and finance literature has concentrated on top management and shareholders and neglected advisers, employees, customers, and suppliers. We also found that a stakeholder analysis framework can be adopted to evaluate each merger or takeover. This chapter establishes a new framework for evaluating M&A beyond the conventional shareholder value approach; however only one case study is analyzed. Managers and other stakeholders can use the proposed method to determine the likely impact of an M&A upon themselves and others and consequently weigh up the desirability of doing a deal in a wider context than currently. The consequences for stakeholders following a merger or acquisition are often profound. The key protagonists ought to be more aware of these consequences which can be detrimental to stakeholders and the organization itself. The approach taken in this chapter provides a new method for both academics and practitioners to evaluate the impact of M&A.