The impact of a successful acquisition on performance and management : a case study

Abstract

Only a few of the bank merger and acquisition attempts have been concluded successfully. The recent success of the Barclays Bank PLC and Absa Group acquisition has proved that success is possible when the transaction is conducted properly. The aim of this study was to identify the potential driving factors behind this success and to illustrate the effect of these factors on management and performance. The general objective of this dissertation was reached by conducting research on this subject. The banking sector in South Africa has been described to set the background for discussing the history of bank mergers and acquisitions in our country. Discussing the risk considerations with regard to the banking industry was essential to this study in order to determine the potential driving factors of success. After identifying these factors, certain aspects of management and the conducting of these management tasks were discussed. A few financial performance measures relating to the banking industry specifically were identified and explained. The implementation of all these factors, aspects and measures on the Absa-Barclays transaction has shown some significant results. Apart from the research done, information was gathered through the completion of a questionnaire and the interpretation of both Absa's and Barclays's financial reports for 2005. The analysis of the driving factors of success has indicated the success of the transaction. The change in management structure as well as the way in which the important human factor was approached and being dealt with by management, has illustrated the potential success of the acquisition. All of the financial performance measures revealed positive results after the announcement of the acquisition. The success of this transaction can be used as benchmark when conducting similar transactions in future.