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New research on acquisition from Harvard Business School faculty on issues including leveraged buyouts, management challenges that come with growth-by-acquisition, and M&A trends.
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Elon Musk’s Twitter Takeover: Lessons in Strategic Change

Re: Andy Wu

In late October 2022, Elon Musk officially took Twitter private and became the company’s majority shareholder, finally ending a months-long acquisition saga. He appointed himself CEO and brought in his own team to clean house. Musk needed to take decisive steps to succeed against the major opposition to his leadership from both inside and outside the company. Twitter employees circulated an open letter protesting expected layoffs, advertising agencies advised their clients to pause spending on Twitter, and EU officials considered a broader Twitter ban. What short-term actions should Musk take to stabilize the situation, and how should he approach long-term strategy to turn around Twitter? Harvard Business School assistant professor Andy Wu and co-author Goran Calic, associate professor at McMaster University’s DeGroote School of Business, discuss Twitter as a microcosm for the future of media and information in their case, “Twitter Turnaround and Elon Musk.”

Is There a Method to Musk’s Madness on Twitter?

by Christina Pazzanese, Harvard Gazette

Elon Musk's brash management style has upended the social media platform, but was bold action necessary to address serious problems? Andy Wu discusses the tech entrepreneur's takeover of Twitter.

The Unlikely Upside of Mergers: More Diverse Management Teams

by Lane Lambert

Mergers shake up the status quo at companies and help women and people of color move up the ladder. Research by Letian Zhang mines data from 37,000 deals. Open for comment; 0 Comments.

Dog Eat Dog: Measuring Network Effects Using a Digital Platform Merger

by Chiara Farronato, Jessica Fong, and Andrey Fradkin

With heated debate over antitrust regulation of online platforms, this study finds that when a larger platform acquired its greatest competitor, users were not better off with a single platform compared with two competitors, despite marked efficiency improvements experienced by the acquiring platform.

Short-Termism, Shareholder Payouts, and Investment in the EU

by Jesse M. Fried and Charles C.Y. Wang

Shareholder-driven “short-termism,” as evidenced by increasing payouts to shareholders, is said to impede long-term investment in EU public firms. But a deep dive into the data reveals a different story.

Weak Credit Covenants

by Victoria Ivashina and Boris Vallée

Prior to the 2020 pandemic, the leveraged loan market experienced an unprecedented boom, which came hand in hand with significant changes in contracting terms. This study presents large-sample evidence of what constitutes contractual weakness from the creditors’ perspective.

Do Private Equity Buyouts Get a Bad Rap?

by Michael Blanding

Elizabeth Warren calls private equity buyouts "Wall Street looting," but a recent study by Josh Lerner and colleagues shows they have both positive and negative impacts. Open for comment; 0 Comments.

The Economic Effects of Private Equity Buyouts

by Steven J. Davis, John Haltiwanger, Kyle Handley, Ben Lipsius, Josh Lerner, and Javier Miranda

Private equity buyouts are a major financial enterprise that critics see as dominated by rent-seeking activities with little in the way of societal benefits. This study of 6,000 US buyouts between 1980 and 2013 finds that the real side effects of buyouts on target firms and their workers vary greatly by deal type and market conditions.

Improving Customer Compatibility with Operational Transparency

by Ryan W. Buell and MoonSoo Choi

Service firms seeking prospective customers usually highlight the advantages of their offerings and downplay the tradeoffs. This study suggests a different approach: Provide transparency into advantages as well as tradeoffs. The transparency helps customers make informed decisions and can lead to better outcomes for both firms and customers over the long run.

If Your Customers Don't Care What You Charge, What Should You Charge?

by Kristen Senz

Consumer inertia is the tendency of some customers to buy a product, even when superior options exist. Alexander J. MacKay discusses how that habit affects competitive strategy and even regulatory oversight. Open for comment; 0 Comments.

Political Influence and Merger Antitrust Reviews

by Mihir N. Mehta, Suraj Srinivasan, and Wanli Zhao

This paper uses a large sample of United States mergers between 1998 and 2010 to study how political connections help firms obtain favorable antitrust regulatory outcomes for mergers. Given that antitrust regulators are subject to congressional oversight, the authors predict and find evidence that outcomes systematically favor firms that are constituents of politicians serving on judiciary committees.

US Antitrust Law and Policy in Historical Perspective

by Laura Phillips Sawyer

Since the late 19th century, American antitrust law and policy has responded to multiple changes: technological advances that have transformed business structures, political imperatives that have reformed regulations and informed prosecutorial discretion, and economic theories that have reshaped the boundaries of government interventions into the economy. Today, antitrust remains a contested field.

Trade Secrets Protection and Antitakeover Provisions

by Aiyesha Dey and Joshua White

The study examines managers’ responses when facing an increased threat of their firm being acquired. Results add to our knowledge of the use of antitakeover provisions, showing that managers, particularly in high-innovation firms, increase certain provisions to protect long-term innovation output in the presence of elevated acquisition risk.

Amazon vs. Whole Foods: When Cultures Collide

by Michael Blanding

Amazon's acquisition of Whole Foods seemed a Wall Street dream come true. But then Amazon's data-driven efficiency met the customer-driven culture at Whole Foods—and the shelves began to empty. Dennis Campbell and Tatiana Sandino discuss their new case study. Open for comment; 0 Comments.

Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad

by Steven J. Davis, John Haltiwanger, Kyle Handley, Ron S. Jarmin, Josh Lerner, and Javier Miranda

In 2014, the authors published an influential analysis of private equity buyouts in the American Economic Review. Recently, economists Brian Ayash and Mahdi Rastad have challenged the accuracy of those findings. This new paper responds point by point to their critique, contending that it reflects a misunderstanding of the data and methodology behind the original study.

When Negotiating a Price, Never Bid with a Round Number

by Carmen Nobel

Investors who offer “precise” bids for company shares yield better outcomes than those who offer round-number bids, according to research by Petri Hukkanen and Matti Keloharju. Open for comment; 0 Comments.

Are Retention Bonuses Worth the Investment?

by Jim Heskett

There is a time and place for retention bonuses but they should be used sparingly, wrote many respondents to this month's column, says Professor Jim Heskett. Others challenged the value of bonuses, and suggested compelling alternatives. (Online forum now closed; next forum begins October 2.) Closed for comment; 0 Comments.

The Surprisingly Successful Marriages of Multinationals and Social Brands

by Sarah Jane Gilbert

What happens when small iconic brands associated with social values—think Ben & Jerry's—are acquired by large concerns—think Unilever? Can the marriage of a virtuous mouse and a wealthy elephant work to the benefit of both? Professors James E. Austin and Herman B. "Dutch" Leonard discuss their research. Closed for comment; 0 Comments.

Unilever: Transformation and Tradition

by Geoffrey Jones

In a new book, professor Geoffrey Jones looks at Unilever's decades-old transformation from fragmented underperformer to focused consumer products giant. This epilogue summarizes the years 1960 to 1990. Closed for comment; 0 Comments.

Not All M&As Are Alike—and That Matters

by Joseph L. Bower

In this Harvard Business Review article, Professor Joseph L. Bower shares some of the results of his year-long study of M&A activity sponsored by HBS. Discover how five distinct merger and acquisition strategies scenarios play out—and his recommendations for success. Closed for comment; 0 Comments.