Which Type of M&A Makes an Acquiring Restaurant Firm a Star? Profit-Driven Versus Growth-Driven M&A. (August 2022)

• Record Type: Journal Article
• Authors: Mun, Sung Gyun; Koh, Yoon; Jang, SooCheong (Shawn)
• Is Part Of: Cornell hospitality quarterly. Volume 63:Number 3(2022)
• Page Start: 369
• Page End: 384
• Publication Date: 2022-08
• Subjects: profit-driven M&A -- growth-driven M&A -- pre- and post-M&A -- operational profitability; Hospitality industry -- Periodicals; Hotel management -- Periodicals; Restaurant management -- Periodicals; 338.4791
• DOI: 10.1177/1938965520979174
• Languages: English
• ISSNs: 1938-9655

Abstract

This study identifies whether profit-driven or growth-driven mergers and acquisitions (M&As) are more beneficial to a restaurant firm aiming to achieve profitable growth after an M&A. The results indicate that despite the challenges that must be overcome to achieve profitable growth through M&As, profit-driven acquiring firms are more likely to have better post-M&A operational performance than growth-driven acquiring firms. Therefore, this study suggests that when restaurant firms seek to grow their business through M&As, they should pursue this goal after achieving higher operational profitability, along with better cost controls, supply management, and marketing strategies, rather than optimistically adhering to growth strategies before accumulating any internal, market-based competitive strengths.