In this study, we investigate how the performance of an acquisition is influenced by the acquisitions and divestitures previously conducted by the target firm. By combining insights from the corporate strategy literature and organizational structure research, we propose that the efficiency of an acquisition’s post-merger integration phase is negatively affected by the target’s levels of structural fragmentation, which, in turn, are increased by acquisitions and reduced by divestitures. Based on this perspective, we hypothesize that the performance of an acquisition worsens as the size of assets acquired by the target prior to the acquisition increases, particularly if those assets are unrelated to the target’s core business. Conversely, we suggest that the performance of an acquisition improves when the target has divested assets, especially if they are unrelated to its core business. To support our viewpoint, we analyzed data from a sample of acquisitions announced between 1985 and 2019 among U.S. public firms. The results strongly support our claims, making a significant contribution to the corporate strategy literature, expanding research on organizational structure, and providing valuable managerial insights about how to maximize acquisition performance.
