Tug of war? Exploring the role of acquirer and target CEO-level acquisition experience in deal completion

Abstract

Role theory predicts that mismatches between behavioral and structural role expectations can lead to negotiation difficulties. We extend this lens to the pre-completion phase of acquisitions to understand when role conflicts between acquirer and target CEOs may affect deal completion. Adopting an individual learning approach, this study begins by differentiating individual-level learning in the pre-completion phase from firm-level learning typically studied post-completion. Accordingly, we predict that acquirer CEO’s acquisition experience depth (number) and breadth (different types) positively impact the likelihood of deal completion, while target CEO’s experience negatively moderates these relationships due to role conflicts. Using archival and hand-collected data from US public firm acquisitions (2000–2020), we find support for our predictions. Our findings contribute to the acquisition literature by distinguishing CEO-level experience from firm-level experience, unpacking the multidimensional nature of CEO acquisition experience, and applying role theory to the pre-completion phase of acquisitions.