Accounting And Finance Dissertation Data Analysis Sample 5

In previous chapter, results of interviews are presented and the purpose of this chapter is to critically analyse the results using evidence from past studies. Primarily, the discussion below is aimed to show how each of the research questions have been answered by discussing the results obtained from interviews and comparison with past studies. This chapter is organised in a way to achieve this purpose. The chapter begins with discussion of drivers and benefits of M&A followed by discussion of challenges and barriers. Critical success factors and failure factors have also been discussed. The second part of the chapter presents discussion of good practices in three main phases of M&A implementation. Each of the practices identified in literature has been discussed in comparison with evidence provided in past literature. The third and final part of this chapter discusses the development framework. The development framework summarises the results and reorganises the evidence to show how development framework for M&A in banks has been developed in this study. The chapter ends with a small summary.  

The first research question of this study was to analyse how decisions are made to adopt and implement merging in banking organisations. Within this content the researcher conducted interviews and asked respondents to show their opinions of about the term mergers and acquisitions. The results showed that mergers are considered to be combination or aggregation of resources and operations by two or more organisations to form one single entity to increase market share, add value to firms, and increase shareholders’ wealth.

Similar conclusions have be obtained from general literature. According to Ombaka and Jagongo, (2018) mergers and acquisitions involve the union of two or more independent companies and, up to that time, operated separately, so that they become jointly controlled firms. However, the distinction between the two operations is, in many cases, unclear. A merger is normally defined as a transaction where a company is combined with others, and in which the initial entities lose their identity. However, Greve and Man Zhang, (2017) differentiate mergers from acquisitions and defined the latter as a term which is classified as a transaction where a company acquires a stake in another company without combining the assets of both. On the other hand, a partial acquisition is similar to an acquisition but in which no real and effective control is established. Normally it usually implies some kind of cooperation, although it can also serve as a preliminary step for a future takeover. 

The literature also showed that there are alternates to M&A activities or transactions called the strategic alliances which are defined as consolidation of operations which allows companies to collaborate without losing control. There are also strategic alliances that are associations between independent companies in certain activities, services or products. A joint venture is an agreement whereby two or more legally independent companies decide to create a company with its own legal entity but whose legal domain corresponds to them. This agreement generally leads to the creation of an entity in order to develop a common activity that will enjoy the technical and financial support of its members.

Furthermore, the results showed that interviewees agreed that there are strategic motives behind M&A transactions. It was observed that M&A are aimed to achieve for development and growth of the business in the hopes that the firms will success in the acquisition of market and sales along with immediate savings and gain easier and convenient access new markets and customers. Similarly, Barbopoulos and Wilson, (2016) revealed that in the wake of financial crisis in 2008, tha banks had a very defensive strategic approach and the M&A activities were mainly focused on the subsistence of the main financial entities that suffered from liquidity problems and bankruptcy risk. Although during the years before the crisis M&A operations were aimed at gaining size, creating economies of scale and developing new businesses, in the following years those objectives moved to the background. The entities sought to strengthen their balance sheets, simplify their business models and compensate for the fall in profitability.

Furthermore, Joash and Njangiru, (2015) highlighted another aspect that impacted the banking sector in all its fields of action, and M&A decisions are no exception. This was the deep regulatory reforms that governments and regulatory bodies applied throughout the world. These had contradictory effects on the M&A. On the one hand, they were a discouragement for these operations because they try to control more the activity of the institutions in order to reduce the risk. In addition, the unpredictability of the reforms affected the ability of the entities to plan and undertake any FyA operation. However, on the other hand, regulations such as those of Basel III forced banks to strengthen their capital, which stimulated consolidation processes. In the US, a month after his arrival at the White House, Donald Trump proposed a series of transformations in the Dodd-Frank Law, which if they were to be accepted by Congress and then effectively materialized, would entail changes in the environment regulator of the financial sector that could influence M&A operations.

Furthermore, the results showed that employees and managers have a critical role to play in M&A process. The results showed that in case of mergers the main roles include forecasting the effects of merger on assets, market share and shareholder value. Furthermore, forecasting and predicting the effects on firm efficiencies and control on its financial and corporate level. Furthermore, the managers opined that they are to communicate the aims and objectives of mergers along with motivating the work force and corporate governance. Similar roles were identified in case of acquisitions (see section 5.3.5, 5.3.6 and 5.3.7).

The literature search shows that the results above have also been cited in past literature. For example, Rozen-Bakher, (2018) argued that M&A are very important strategic decisions and these activities are based on works of many employees and not only the decisions of higher management. Significant amount of work is performed before undertaking M&A activities. Managers conduct through analysis of potential growth that the firm can achieve from M&A activities in terms of market share, increase in customer base and increase in profitability.

Furthermore, Kyriazopoulos and Drymbetas, (2015) argued that accounting analyses are critical for the decision of M&A activities. The study stressed that although acquisitions are not as simple investment decision as investment in machinery or technology and therefore accounting analyses are performed to predict the impacts of acquisitions. Furthermore, synergies are critical for the success of acquisition and thus people at various level of organisational hierarchy are involved to assess possible synergies to be achieved through acquisition.

Furthermore, Brooks, Chen, and Zeng, (2018) posited that before M&A decisions are made there are three focus areas of pre-M&A analyses. The first is the determination of the value of the target company. The second is the determination of the maximum purchase price to be satisfied, and the third is the choice of sources of finance (particularly in case of acquisitions).

Chu, Teng, and Lee, (2016) focused on the pre-M&A activities and argued that the important aspect, as a reference for the subsequent negotiation of the merger is the exchange ratio or the purchase price in acquisitions. For this purpose, a varied group of techniques aimed at obtaining the value of the target company has been developed. Although, there is no universally agreed method and therefore the study recommended the joint use of all or some of them. It must be clarified that the final purchase price does not have to be known. Since the fixation of that value is surrounded by a series of factors such as the characteristics of the target company, the circumstances of buyers and sellers and the time chosen for the operation, depending on the general economic situation In this way, issues such as obtaining a commercial name, the concurrence of two or more purchase offers, the interest in penetrating safely in an unknown market, etc., are elements that will influence the value and price of different quantities. 

According to Pohl and Tortella, (2017) it is critical to assess and refer to the similarity of operations. It is about identifying similar operations that have taken place in the recent past, although the main problem is obtaining accurate information about them, since some firms being private would have published financial and operational data into public. Furthermore, the manager also need to address the problem of comparability, since in many cases, the circumstances and singularities of the target company will be different from previous transactions. This does not prevent M&A through it is still a valuable reference, as it is indicative of the trend of mergers and acquisitions and the long-term strategic approaches of the companies. It is convenient to estimate the relationship between the market price of these companies and their book value to predict the market value of the target company.

According to Du and Sim, (2016) the most critical success factor in M&A is the achievement of synergies. Possibly synergies are the most commonly pointed motive as motivation for two companies to merge, but on many occasions, the concept of excessively broad meaning is endowed. If two companies can generate more value for their respective shareholders by operating together than separately, it is understood that there are synergies. DePamphilis, (2019) argued that managers must conduct through analyses of synergies in terms of operational synergies and financial synergies. Operational synergies are obtained through economies of scale and economies of scope. However, the benefit is not automatic, but its effectiveness will depend on the talent and skill of managers. Economies of scale consist of the distribution of fixed costs among a larger total production, so that the unit fixed cost will decrease as total production increases. Fixed costs are understood as those that cannot be altered in the short term, such as depreciation and depreciation costs, interest, workers’ base salary or union costs.  

The main drivers for M&A identified in results of the interviews include, synergies, growth and diversification, and economies of scale for cost efficiency (section 5.3.8). Similar divers have been cited in literature which show that there is consistency between results of this study and past literature. Daniya, Onotu, and Abdulrahaman, (2016) focused on synergies as driver of M&A and posited that synergies can come from economies of scope, which consist in producing more, with the same resources, through the efficient use of those that were available. For example, Procter & Gamble uses its advanced marketing system to cover most of the personal care and pharmaceutical products market.

In case of diversification driven M&A, Casu, et al. (2016) argued that diversification refers to the decision of a company to leave its main markets, geographic and products, and lines of business, to enter other. The purpose of diversification is to utilize the financial resources obtained from existing markets and invest in other markets to increase profitability. However, Johan, (2019) classified all the motives under one umbrella term, value generation, and concluded that principle of value generation states that companies generate value by investing the capital they obtain from their investors, to generate future cash flows at a rate of return higher than the cost of capital. The faster the generation of income, and the more attractive the rate of return, the greater the value will be generated. For this process to be sustainable over time, the company must find a competitive advantage that will last and be defended against its competitors. M&A activities are more than often focused on achieving economies of scale. Economies of scale consist of the distribution of fixed costs among a larger total production, so that the unit fixed cost will decrease as total production increases. Fixed costs are understood as those that cannot be altered in the short term, such as depreciation and depreciation costs, interest, workers’ base salary or union costs.

The results showed that various benefits are obtained from M&A activities which include diversification, strategic realignment, economies of scale, increase in market power (section 5.4.1). In case of benefits cited in past studies, similar results are reported. For example, Frankel and Forman, (2017) concluded that diversification is considered to be very beneficial for merging companies. Two companies with a presence in radically different markets can be integrated in search of this objective. There are two arguments that justify the diversification of a company, reduce shareholder risk and take advantage of the opportunities offered by sectors with greater growth potential than the markets in which the company is currently located. Through diversification, the company will have a more stable income, since it will not depend on a single market. The lower the correlation between the cash flows of the entities, the greater the reduction in the volatility of the investment. The direct consequence will be greater confidence in the company by investors and financial institutions, which will mean a decrease in the cost of capital.

Within the context of strategic realignment, Halkos, Matousek, and Tzeremes, (2016) opined that business environments change rapidly in many aspects, but legal and technological dimensions are especially important, because they are factors that can lead a company to lose the right to act in a market due to regulatory change or to be very behind its competitors, if it is not possible to adapt to technological advances. M&A can help banks adapt extremely quickly to these changes in the environment. Although authors such as Micu and Micu, (2016) point out that this is a more proper motive for divestments, this was one of the factors that drove the wave of mergers of the 90s in the United States.

In case of risks identified in M&A activities, the results showed that the main risks identified by research participants are conflicts between merging workforce leading to demotivation and disappointment causing loss of human resources (section 5.4.2). Natocheeva, et al., (2017) reported a comprehensive list of risks associated with M&A activities which include risks identified in results as well as others. The study reported that less than half of the mergers are successful in accordance with the opinions of shareholders, customers and employees, the three groups to which the author gives greater value. The biggest risk that exists in a merger is to pay a premium above the real value of the target. To avoid this, a valuation of the individually considered entity and a measurement of the value of the combined entity resulting from the operation will have to be carried out. In both cases, it will be necessary to estimate the cash flows and the cost of capital to be discounted in the DFC in order to make a proper valuation.

Wanke, et al. (2016) also referred to cultural conflicts and impacts on employees and executives using the term corporate integration. The author stressed upon the elaboration of a pre-merger integration plan and the precise definition of the roles of each person. However, there may be some reluctance to follow it strictly by managers, who, ultimately, are responsible for implementing it. On many occasions this is the reason why mergers fail. On the contrary, the excessively strict implementation of the plan could also frustrate the operation because, in any case, it will be necessary to adapt to the changes in the environment and to the reactions of the stakeholders, which cannot be foreseen with total accuracy. The predisposition of managers and workers, business culture and informal organization play an essential role.

The results found that main barriers and challenges faced by the M&A activities in banking industry include lack of communication, employee retention and cultural challenges as some of the major factors (see section 5.4.4). Similar barriers have been identified in past literature. According to Karolyi and Taboada, (2015) conflict of interest between merging parties is particularly an important challenge. The conflict of interest and lack of agreement between merging companies is a significant threat to success of merger. This is particularly an important element in case of hostile takeovers where the firm being acquired is not satisfied with the transaction. The main outcome of conflict of interest, if realised leads to differences and struggles between managements and thus negatively affects smooth transition.

Furthermore, Angwin, et al. (2016) stressed upon the use of proper change management framework during M&A activities as a solution to eliminate various problems such as lack of motivation, hostile reaction by employees under the fears and uncertainty of what would happen to them after the acquisition and other factors. The study recommended that proper communication channels and systems are aimed to engage employees and address their issues and concerns during and after the mergers. The most commonly cited agenda of communication is to address any issue of employees in terms of job security and aimed to elaborate on individual benefits of M&A. 

As per the results reported in section 5.4.5 the main success factors identified by the banking sectors employees include trust between managements of merging organisations, resistance towards the change, and experience with previous mergers. However, the literature review showed quite a large list of success factors that are relatively different from the factors identified in the interview results. Within the context of banking industry, Howson, (2017) identified that due diligence is one of the most important critical success factors. Due diligence refers to the investigation and integral diagnosis which refers to carrying out in detail a series of small audits on financial, fiscal, human resources, trade union, legal and operational aspects of a company.

The idea is to make sure that there is significant and lucrative potential for M&A activities. 

Furthermore, Ozturk, (2016) also identified a variety of critical success factors and stressed upon the degree of the strategic product-market integration. This refers to the degree of adapting the portfolio of products of the acquired by the bank to the objectives and strategy of the acquiring bank to be competitive and cover most of the market in which it operates. The study also highlighted the importance of the operational integration that involves integrating processes, production lines, technology, patents, complementing resources between both companies; on the one hand the acquiree, and on the other, the acquirer. Furthermore, Adeleke, et al. (2019) stressed upon the financial integration, which has to do with adapting the financial systems of the acquired company with the financial systems of the acquiring company, in order to make money management efficient and maximize the value of the company. In addition the integration of human capital, which is related to managing the capacities, attitudes, skills and knowledge of each of the people of both companies involved in the acquisition process, with the purpose of optimizing their productive work.

In case of failure factors, the results in section 5.4.6 showed that main failure factors identified are lack of involvement of the owners, difference between theoretical and practical valuation, lack of clarity, cultural integration issues and negotiation errors. It can be observed that these factors are the other side of the coin of critical success factors. Each of these factors relate to lack of integration in one or more aspects. Comparing these to previous literature Lee and Carter, (2018) reported that one of the main factors of failure of M&A is lack of integration and compliance. The product-market synergy is very important and lack of which creates significant problems for the firm after the M&A. The product-market synergy refers to the different product-market combinations that are defined as the company’s strategic business units. In this regard there are as many areas as possible missions (target markets) that the company can combine. If these are not obtained the value creation principle as discussed above is compromised and objectives of M&A are not achieved.- 

Hamza, Sghaier, and Thraya, (2016) posited that lack of operational synergy which refers to collaboration so that the sum of the joint operational efforts of the companies involved in the merger operation is greater than the sum of the individual efforts is the main failure factor. The study justified this assertion by arguing that if M&A fails to provide profitable opportunities to individual companies as compared to those that each of them were obtaining before the M&A, then it becomes the main failure factor. The lack of financial synergy is also an important and commonly cited failure factor in past literature. Financial synergy consists in increasing the value of the merged companies created by strictly financial advantages linked to mergers and removals, which cannot be achieved by private investors through the private management of their portfolio of shares. The assimilated culture represented by the degree to which the organizational culture of both companies achieves shared values among their members, an aspect that distinguishes one organization from others.

In this section, this study compares the results regarding implementation of M&A strategy through comparison with past literature. The first factor identified in the results was strategic Planning and the results showed that strategic has a high importance in the pre-implementation phase. This is based on the rationale that the M&A activity is a major business decision which affects current and future state and wellbeing of the firm and therefore through strategic planning is required to ensure smooth transaction. 

Within this context, Ahdizia, Masyita, and Sutisna, (2018) argued that the foremost aspect of strategic planning for M&A is to conduct due diligence. Due diligence implies the analysis and evaluation of all the key elements that influence the decision to proceed with M&A. It may be a legal obligation, but the term is commonly more applicable to voluntary investigations. A structured process requires a series of studies that help confirm the impact of business M&A. This is of great help to corporate directors and serves as a shield or shield against possible counter-arguments, debates, and even lawsuits promoted during and after the transaction. It is also required by sellers to ensure that buyers have all the elements to consider the value of the transaction. Considering its importance, Due Diligence reports should be entrusted to prestigious specialists with experience in the field. At this point it is important to reiterate that due diligence was also found as one of the critical success factors in discussion presented in section 6.2.5. 

The second good practice identified in the pre-M&A implementation phase is communication of objectives. The results showed that communication of objectives is a medium level important factor in the pre-M&A phase. In this practice M&A leaders must communicate with the stakeholders including employees of the firms and explain them the rationale and benefits behind M&A and motivate them to support and play their role in the M&A process.

Similar conclusions have been found in Sarala, Vaara, and Junni, (2017) who argued that the role of stakeholders is critical for the success of M&A and for any other organisational strategy or organisational change for that matter. The study reported that there diverse stakeholders are involved in M&A process among which employees and shareholders are most critical along with regulatory authorities who keep string watch on M&A transactions in the economy. 

These results can be related to previous results in which it was established that value creation is the main motive for any M&A activity and according to the value creation principle the purpose of increasing the wealth of shareholders is to gain satisfaction and increase the investment potential of the firm. However, it is also important to note that it has been established that lack of integration of human factor such conflict of interest among employees and management of companies involved in M&A is a critical failure factor. Therefore this study concludes stakeholder communication is critical in pre-M&A phase. 

The third good practice identified in the results was preserving current value of assets. The interviewees opined that current value of assets also has high importance in the preimplementation phase. This is based on the reasoning that the firm must be able to retain its financial performance after the process of M&A. Rompotis, (2015) also highlighted the same idea by arguing that M&A firms must ensure that the M&A decision has positive impact on financial health and performance. This is critical for the value generation principles as discussed earlier. These results are also consistent with the results reported in section 6.2.1 where drivers of M&A are discussed. 

The next factor identified is legal know-how which as per the interviewees is the degree of compliance with local and international legal requirements to enhance legitimacy in the entire process. According to Sarala, Vaara, and Junni, (2017) one of the main risks facing M&A activities is legal compliance. This risk, if realised, is likely to have significant adverse impact on the end results of M&A and may also lead to financial penalties due to lawsuits. In addition, the study also found that task delegation is important in pre-M&A phase. Rompotis, (2015) discussed the same aspects and posited that task delegation is essential phase in strategic planning of M&A. All stakeholders and team members must have specific tasks and roles to perform in the M&A transaction and each of them should be hold responsible for their responsibilities.  

The final and most important factor identified in the pre-implementation phase is the technological review of both firms. It is important to note that the importance of technical review has already been established in previous section where it was emphasised that a through financial review and forecasts should be conducted to ensure that financial and operational integration. These are critical success factors of M&A activities. Past studies such as Warter and Warter, (2015) also support the importance of this factor. Feasibility analysis and multiple investment analysis to assess the possible benefits of M&A transaction have been recommended in the literature. 

The first practice as per the results in section 5.5.2 is socialisation which has medium level of importance and refers to interaction and communication between the employees and managements of the merging firms. Arena and Dewally, (2017) highlighted that communication and interaction is essential for successful cultural integration of merging firms. Effective communication and team work enhance the success and benefits of M&A activities. It is also important to note that these results provide support to earlier results discussed in section 6.2.4 where lack of employee communication has been discussed as one of the main challenges and barriers to the success of M&A.  

The cultural adaptation was identified as another good practice in during implementation phase. It has high level of importance because employees have to integrate into one single firm having a single culture through sharing and accepting morals and principles in previous cultures. According to Hyder and Osarenkhoe, (2018) cultural conflicts have significant adverse influence on the involvement and motivation of employees in merging firms. This factors leads to dissatisfaction and compromises the smooth transitioning and change management process. Furthermore, these results are also related to barriers and challenges discussed earlier in section 6.2.4.  

One of the important practices during M&A implementation is the good governance of the M&A process. Regarding this factor, Warter and Warter, (2015) concluded that governance of M&A process involves due diligence, risks management, legal compliance and cultural management among other strategies. The idea of governance is to make sure that there is a specific framework focused on maximising the benefits of M&A while preventing risks and threats to the merging firms. Furthermore, the aim of governance is to make sure that there is high level of transparency in the entire M&A process. 

Furthermore, the results also identified effective communication as a medium level importance factor of during implementation phase in M&A. Farah, (2017) and various other researchers have identified the role of effective communication among all stakeholders led and controlled by the M&A team to make sure that all stakeholders are playing their roles and delivering their responsibilities. Furthermore, communication is also required to address any conflict of interest in the teams and promote team work for the achievement of goals and objectives of the M&A transaction. Furthermore, the results demonstrated that interviewees considered disciplinary measures as a high level importance practice in the during implementation phase. The idea is to have team that that has a authority to review and intervene in all process of M&A and make sure that relevant measures are provided to support M&A process such as risks assessment and risk mitigation strategies.

For the post M&A phase the first practice as per the results in section 5.5.3 was value realisation amongst departments. This is a medium level importance practice and is focused on organisational culture and significant financial performance of the firm. Similar results have been reported by Ab-Hamid, et al. (2018) who focused in the role and impact of human capital in M&A activities. The study referred to the anxiety experienced by the broad employee base, once the M&A &F decision has been made. Prior to integration there is the anxiety of employees trying to cope with uncertainty, often assuming the worst possible scenario, for their future jobs. In particular, the perception of threat of job loss may lead to increased concern with an effect on productivity. Therefore it is critical to have effective communication with the employees and managers to satisfy them regarding the value that M&A would generate for the firm as a whole and for them individually. Furthermore, the results also indicated that asset reassessments are high level importance practice in the post-implementation phase. These are aimed to monitor the overall financial performance of the firm in the wake of M&A process. These results are consistent with the findings of Lohrke, Frownfelter-Lohrke, and Ketchen Jr, (2016) concluded that financial benefits and gains are main driver or motivating factor for M&A processes. Therefore, firm need to have constant monitoring on financial gains obtained and ensured that they are properly communicated as well as shared among all stakeholders.   

Another important practice in post-M&A phase recognised as medium level importance by the sample members is the transition of operations, departments, mission and vision of the firm. The aim of this practice is to ensure and monitor that the all objectives of the M&A have been achieved by the firm in terms of operations, departments, mission and vision. Considering past literature, the results can be related to commonly cited operational integration and synergy factors. Joash and Njangiru, (2015) focused on the importance of operational synergy and posited that every day there are more industrial companies that discover that the standard management tools are insufficient for them, and begin to be interested in the strategic development of their brands. This helps explain why leading industrial companies are reconsidering their perception of them. Considering this a company after M&A must ensure that other firm is coupled as quickly and efficiently as possible to the daily activity of operation can mean in many cases, the primary objective. To the extent that the new company integrates and absorbs processes and technology, it will benefit faster in its results.  

In post M&A, the participants also identified transformation of merged business as a medium level importance practice which relates to the degree to which business objectives of M&A have been accomplished after the M&A process. Comparing this assertion with past literature, it was found that similar perspectives have been reported in Ibeh and Makhmadshoev, (2018). The use of key performance indicators was recommended as technique to measure and assess the benefits of M&A in terms of  business objectives. The idea is to have a certain standards that predict whether the benefits of M&A have been adequate. The key performance indicators may include both qualitative and quantitative measures to support comprehensive assessment of impact of M&A.   

Finally the results showed that in post-M&A phase, monitoring the progress was considered by the participants to have high level of importance because monitoring makes sure that the managers have undertaken the process prudently and the team has worked effectively and negotiations have brought significant results for all the stakeholders to the M&A. Within this content, there is large number of studies that advocate use of monitoring techniques that allow governance of M&A process. The fundamental purpose of the M&A monitoring is to make sure that all objectives are being achieved and in case the results are not as per planning then, monitoring allows managers to identify relevant strategies and make changes in the M&A process and strategies to accomplish planned objectives. Furthermore, it is important to realise that monitoring is also related to critical success factors where managers are required to communicate the gains of M&A and motivate employees and workforce and gain satisfaction of all stakeholders.    

The purpose of this section is to discuss the framework developed in this study and provide support for each of the element in the framework through empirical evidence as well as support from past literature. The framework as shown in the figure below has various blocks or categories. These categories consist of relevant factors that are related to M&A process. In discussion below each factor of the framework are discussed and relevant evidence and supporting discussion are presented. 

The foremost block in the framework is key attributes of M&A. The key attributes of M&A consist of seven sub-factors, namely, strategic actions, drivers, barriers and challenges, benefits, risks, and critical success factor. According to Daniya, Onotu, and Abdulrahaman, (2016) M&A between financial institutions represent significant opportunities and risks, both for the entities involved and for the financial system worldwide. From the corporate point of view, they can undoubtedly have a positive effect in the short term. Through them it is possible to create stronger entities to face competition, with better possibilities to meet the growing demands of customers, use more advanced technologies, take advantage of the lower costs derived from the existence of economies of scale, in addition to creating greater value for the resulting entity. It is in this sense that mergers and acquisitions of an offensive nature turn out to be an attractive external growth strategy for many financial institutions. Therefore, it can be inferred that M&A has strategic importance for any financial institution having significant impact on the financial health and current and future sustainability of banks. Therefore the importance of strategic action of M&A is highlighted. 

Another key attribute of M&A is drivers. The main driver of M&A is value creation. The primary and ultimate aim of any M&A activity or transaction is financial gains for the firm and its stakeholders. The results and discussion in section 6.2.1 indicate that value creation through M&A are based on the synergies, growth and diversification, and economies of scale that can be achieved by union of two organisations. There is significant evidence in past literature to opine that many other researchers have reached similar conclusions. The aims of M&A is to achieve higher profitability as a combined or unionised organisation as compared to financial gains that each could achieve individually. Thus according to Casu, et al. (2016) if M&A fails to provide higher financial results in terms of profitability, economies of scale, and other financial health indicators as compared to individual firms than the entire M&A process is rendered useless.  

The benefit of M&A is also a key attribute. Every organisation proceeds with M&A transactions provided that the management expects that M&A benefits all stakeholders of both organisations. A number of benefits have been identified in this study which includes, diversification, strategic realignment, economies of scale, and increase in market power. The study also found that these results are consistent with past studies. For example, Johan, (2019) concluded that diversification benefits merging companies by allowing them to reduce shareholder risk and take advantage of the opportunities offered by sectors with greater growth potential. Similarly, Frankel and Forman, (2017) pointed out fast paced changes in the business environment requiring the organisations to adopt changes such as technological changes realign the firm in the market. The strategic realignment allows to explore new lucrative business opportunities. 

Another important sub-factor of the framework is related to risks of M&A. As per the results of interviews conflicts between merging workforce leading to demotivation and disappointment causing loss of human resources. The discussion of these results with past studies indicates that lack of communication and engagement with workforce is key contributing factor. In addition, the study also found that cultural differences lead to conflict of interest and loss of human and intellectual capital. According to Natocheeva, et al., (2017) if there is conflict of interest between merging firms, the uncertainty and anxiety among the workforce increase which in turn leads to high employee turnover and loss of talented and experienced personnel. Similar perceptions and factors have been identified in case of barriers and challenges identified from participants during interview discussions. It was found that main barriers and challenges faced by M&A include lack of communication, employee retention and cultural challenges. These factors have been widely discussed in past literature. Karolyi and Taboada, (2015) concluded that communication failure is one of the main causes of poor implementation of M&A. The common outcomes of lack of communication lead to cultural differences and conflicts which in turn cause lack of integration in terms of human resources as well as team work. The barriers related to human elements have been widely reported as one of the main failure factor in M&A. 

This discussion indicates the importance of having critical success factors in the M&A development framework. As per the results of this study the main critical success factors for M&A transactions include trust between managements of merging organisations, resistance towards the change, and experience with previous mergers. In this case there are differences as compared to past literature and thus it can be opined that the factors identified in this study are new in the literature. The literature shows that some of the most commonly cited critical success factors of M&A are due diligence, strategic product-market integration, financial integration, operational integration, and cultural integration. 

The final element in the key attributes of M&A is failure factors that cause hindrances in the execution and implementation of M&A and thus hinder the achievement of aims and objectives. Within this context, the interview results reveal that failure factors include lack of involvement of the owners, difference between theoretical and practical valuation, lack of clarity, cultural integration issues and negotiation errors. Comparing with past literature, the study found various studies in which similar factors have been reported and thus there is consistency between current and past research. It can be inferred that these factors must be considered as a part of development factors because of valuation and communication errors like other factors has significant impact on derivation and reaping of benefits of M&A. Thus, according to Ozturk, (2016) there must be high level of integration in terms of human resources, organisation culture, and other aspect to ensure that value is created for all stakeholders which include management, employees, shareholders, and regulatory authorities. 

The second important block of the development framework is the M&A process stages, namely pre-M&A, during M&A and post M&A. This interview results indicate that a number of preM&A activities or good practices that are critical for the success of M&A. Strategic planning is the main sub factor which refers to strategic actions taken by the managers. Past studies showed that M&A strategies and activities start from due diligence reports. A series of analysis and investigation are carried out which mainly include valuation of firm being acquired and possible financial benefits of merging and acquisition activities. The results of these reports help the higher management to support their decision and plans for M&A and communicate with other stakeholders to show its benefits and to motivate them for active involvement (Adeleke, et al. 2019). Furthermore, the results also showed that communication of objectives, benefits, and roles of all stakeholders in the entire M&A process is also a good practice and thus it is a part of development framework. Communication is considered to be a high important practice that ensures that M&A leaders must communicate with the stakeholders including employees of the firms and explain them the rationale and benefits of their decisions. In addition, another preM&A practice is preserving value of existing assets of the firm. This is also a critical success factor as M&A are expected to increase the value of assets and thus provide value for stakeholders (Lee and Carter, 2018). The know-how and knowledge about legal requirements was also found to be a good practice in pre-M&A implementation phase. Finally the most important factor for the pre-implementation phase is the technological review of both firms as per the interview results. These results have support from past literature because many researchers such as conducting due diligence analysis before implementation of M&A.

Within the case of during M&A practices, the results of interviews show that communication and

interaction between the firms at all levels are critical. This practice is supported by past researchers based on the rationale that communication is essential for integration for cultural and operational integration. Since cultural and operational synergies are critical success factors of M&A as discussed in key attributes and communication is also recognised as one of the main failure factors, therefore they must be included in the M&A development framework. According to Hamza, Sghaier, and Thraya, (2016) communication ensures that all operating activities are conducted within the context of M&A objectives. Furthermore, they prevent conflicts arising out of cultural differences.

The governance of M&A process was also identified as one of the good practices. Along with evidence from interviews conducted in this study, the researcher also found significant level of support from past studies. Ahdizia, Masyita, and Sutisna, (2018) concluded that governance of M&A process involves due diligence, risks management, legal compliance and cultural management among other strategies. The ultimate purpose of governance is to ensure high level of transparency in all M&A activities. 

Within the case of post-M&A practices, the results reveal that main sub-factors are value realisation amongst departments, asset reassessments, the transition of operations, departments, mission and vision of the firm, and monitoring progress are good practices that must be a part of the M&A development framework. There is also significant support from past literature to recognise the impact of these factors in the success of M&A activities. According to Sarala, Vaara, and Junni, (2017) in order to remove resistance from employees which develops due to anxiety during the M&A phase, it is critical that M&A leaders adopt proper change management methodology and ensure that the benefits of M&A in terms of increase in assets, operational synergies, and advantages for all stakeholders are assessed. The basic idea is to show the realisation of benefits of M&A and address possible barriers to enhance value creation and prevent loss of managerial and human talent. 

The development also highlights the importance of internal factors, external factors, and change management for M&A. A large number of internal factors have been identified in this study which include cultural synergies, operational synergies, product market integration, and communication. In case of external factors, the researcher demonstrated that compliance with legal requirements and support from other stakeholders is critical for the success of M&A. Finally change management has been highlighted throughout the pre-M&A, during M&A, and post-M&A stages. According to Rompotis, (2015) change management has become one of the strategic aspects of financial institutions. The external business environment is highly dynamic and remain in a state of constant change due to technological updates, change in taste and preferences of customers, as well as changes in the regulatory environment that focus on enhancing corporate governance, consumer protection, competitive landscape. 

Furthermore, Arena and Dewally, (2017) pointed out that change management methodologies must be an interal component of M&A activities because M&A have a significant impact on entire organisation leading to possible changes in operational processes, changes in target market, cultural adaptation, among others. Due to these changes employees and managers who are actually responsible to implement M&A process need to adapt to new environment. This change is so significant that it affects their productivity, performance, and motivation towards the M&A activities. Thus leadership must have adequate change management mechanisms in place to address resistance towards M&A, on one hand, and ensure smooth implementation of M&A on the other hand.