Mergers & acquisitions in the elevator industry: The use of information and communication technologies to avoid information asymmetry

Abstract

Abstract Mergers and Acquisitions (M&A) is one of the most explored growth strategies in all markets, and this is indeed the case in the elevator industry, an engineering‐based industry with important service contracts. The reality is that a high percentage of the operations carried out do not meet the expectations of the investors once the integration phase has been completed. The authors have reviewed 290 papers related to successes and failures of M&A operations from different industries, between 1990 and 2020, and the conclusion is that there are several causes of failures in M&A operations, but the most common one, and the one with the highest risk of overprice in an acquisition decision, is information asymmetry. During the negotiation phase a large amount of data is collected, and subsequently analyzed during the due diligence period, but it may not correspond to the reality during the integration phase. In this article we will propose how information asymmetry can be avoided through internet of things (hereinafter IoT) devices installed in an elevator. This can also be applied to other engineering‐based industries with service involvement and potential remote measurements.

Keywords

• adverse selection
• digital strategy
• ICTs
• information asymmetry
• IoT
• IT due diligence