The Impact of CEO Retention on Post-Merger Integration: Insights from Chegg in the Ed-Tech Industry

Abstract

This study examines the crucial role of chief executive officers (CEOs) in post-acquisition integration, focusing on Chegg, a prominent ed-tech company in a rapidly evolving industry. Analyzing CEO actions post-acquisition through interviews and metrics, we find that a three-year CEO retention period significantly contributes to successful integration at Chegg. This research emphasizes the importance of understanding ideal CEO retention and their strategic actions, offering insights for more successful post-acquisition integration and long-term economic benefits.

1. Introduction

This paper investigates the critical role played by the CEO of a target firm in facilitating successful post-merger integration (PMI). Given their prominent position within organizations, CEOs wield substantial influence in cultivating and utilizing dynamic capabilities, making them the key drivers in shaping organizational outcomes (von den Driesch et al. 2015).

Our investigation centers on the impact of the CEO’s retention period on the post-acquisition process based on a case study of Chegg, a leading ed-tech company chosen because of the volatile nature of the ed-tech industry. This industry is rapidly growing along with the demand for digitalization and personalization in learning opportunities (Shustova et al. 2023).

Within such an environment, the CEO’s influence is vital, given this sector’s rapid shifts and evolving demands for digital transformation. Previous research shows that CEO perceptions become the predominant basis for organizational action as relevant cause–effect relationships are often unknown and unavailable with high environmental uncertainty (von den Driesch et al. 2015).

We postulate that the actions and decisions undertaken by the target firm’s CEO during the post-acquisition phase significantly affect the integration process. In particular, their mobilization or mitigation actions can influence value creation during the PMI process.

A primary metric employed to measure the CEO’s influence is the analysis of resource integration, cultural integration, and an increase in Chegg’s revenue following the completion of the merger. We used this metric to choose two successful and unsuccessful firms regarding PMI success and engaged in an in-depth examination to better understand their acquisition process.

“PMI Success” was calculated according to the usefulness of the target firm resources in the business and how its outcome has influenced Chegg’s financial revenue. The higher the contribution of the resource to the business, the more successful the PMI result.

This paper observes how significantly the target firm’s CEO’s retention time affected post-acquisition integration success. In this regard, we concluded that three years was the ideal retention period for Chegg. Having a more specific guideline on the ideal CEO retention time and the actions of the CEO would afford a better understanding of the firms’ direction and methods when involved in M&A. This understanding increases the possibility of successful PMI, economic benefits and business scalability in the long term.

2. Literature Review

2.1. Technological Acquisition

According to the resource-based view (RBV), firms acquire other companies to create distinctive and challenging-to-replicate assortments of resources. The three main motivations for technological acquisitions are adding strategically valuable resources, enhancing market power, or achieving a strategic renewal (Graebner et al. 2010). Firms pursue technological acquisition to obtain the target firm’s technology or products. They also strive to acquire the knowledge deeply embedded in the human resources of the target firm. Secondly, an acquisition can strengthen the firm’s market power by rapidly expanding the buyer’s presence into new geographic areas or customer segments. Firms can also achieve a strategic renewal through technological acquisition. Strategic renewal means a significant and disruptive change in a firm’s approach to achieving performance (Agarwal and Helfat 2009). Through acquisitions, firms can avoid core rigidity (Vermeulen 2005). From the target firm’s perspective, the primary motivations for selling firms are to add strategically valuable resources at the right time and to relieve the personal pressures the managers experience (Graebner et al. 2010).

Haspeslagh and Jemison (1991) proposed that acquisitions play a crucial role in the renewal of organizations by serving three main functions: they enhance the acquirer’s presence in its current field (referred to as domain strengthening), they expand the scope of the company’s existing field (known as domain extension), and they introduce the company to entirely new fields (termed domain creation).

2.2. Target Firm CEO’s Influence on Value Creation during the PMI Process

PMI is the managerial process of consolidating and reorganizing different companies to facilitate the synergy and efficiency of the deal to its predicted value (Graebner et al. 2017). Controversies surround whether target firms’ CEOs should be considered valuable resources. Some scholars argue that the CEO of the target firm should be replaced, citing the sale of the company as evidence of incompetence. However, the target firm’s most valuable technological asset often resides within its human capital.

Also, the asymmetries in information between the acquiring firm and the target firm are more noticeable in technological acquisitions compared to other types of mergers (Graebner et al. 2010). Target CEOs possess tacit knowledge that is hard to duplicate, which is even more prominent in the case of founder-CEOs (Aghasi et al. 2022). CEOs of target companies can provide acquiring firms with valuable insights into the target firms’ organizational culture, relationships with key suppliers and clients, and foundational social dynamics. This insight includes knowledge about crucial employees within the target firms and strategies to retain them (Aghasi et al. 2022).

When seeking strategic continuity, the replacement of executives is not preferred. Making executive changes after the acquisition of a company can cause disruption and discontinuous changes in strategy (Cannella and Hambrick 1993).

In addition, target CEOs also play a vital role in implementing cultural integration between the two companies. According to previous studies, cultural factors, such as communication style and daily management routines, are responsible for low post-merger performance (Cartwright and Cooper 1993; Datta 1991; Marks 1999; Schwartz and Davis 1981). Cultural integration is necessary to create synergy as the workforce is crucial in aligning the company’s various components, as seen in an empirical study about the acquisition of Lehman Brothers. If employees are motivated to pursue objectives outside the company, it can disrupt and reset the entire workflow. Executives of the two companies having the “Me–They” issue have problems integrating the culture. The problem occurs as they sense inferiority or superiority over one another, and the gap widens between the members of each company (Woo 2015).

Furthermore, the CEO wields authority over the entire workforce and plays a pivotal role in decision making regarding acquisitions. To some extent, the CEO’s perspectives contribute to the success of the cultural integration resulting from these decisions. This paper will focus on the involvement of CEOs from target firms in the PMI process.

Target firms’ CEOs influence value creation during the PMI process through mobilizing and mitigating actions (Graebner 2004). The leaders of the acquired companies should assume this responsibility because managers from the acquiring company often create a void in leadership as they concentrate on their original business or other aspects of the acquisition process (Graebner et al. 2010).

Mobilizing action is focused on guiding the team and maintaining organizational momentum. There are two forms of mobilizing actions: internal pacing and accelerating coordination (Graebner 2004). Internal pacing is channeling employees’ energy toward tangible tasks; setting specific goals and timelines for the acquired organization would be an example of this. Accelerating coordination, on the other hand, focuses on enhancing interaction between the buyer and the target firm, which acquired leaders achieve by encouraging collaboration between the two entities.

Mitigating actions resolve complaints regarding addressed concerns of acquired personnel (Graebner 2004). Target firm managers implement this by expediting concerns and real-time communication. Expediting concerns means taking action to address and resolve employees’ acquisition-related problems. Research shows that PMI may trigger strong negative emotions among acquired employees (Buono and Bowditch 2003), such as acquired individuals experiencing a loss of relative standing or alienation and inferiority. These sensations could lead to the failure of cultural integration within the company preceding PMI. Furthermore, these statuses could adversely affect post-merger top management turnover, inventor productivity, and firm performance in the near future. Mitigating actions play an essential role in alleviating the dissatisfaction and anxiety of the employees during the PMI process.

3. Methodology

This study illustrates the factors determining the success or failure of Chegg’s acquisitions and then generalizes its findings to the business world. Chegg was selected because it is the market leader in the ed-tech industry and has conducted several technological acquisitions to transition to its current business model. It continuously strives to sustain its position by acquiring companies to fulfill its vision of meeting every educational need.

Qualitative case studies depict an intervention or phenomenon along with its real-life setting (Yin 2009). They effectively elucidate the how and why of phenomena through thorough analysis based on our research queries (Eisenhardt 1989). In this study, a descriptive case study method was utilized to grasp the process and significance of the case subject (Baxter and Jack 2008). Previous studies investigating the impact of technological acquisition on established entities have utilized the case study approach, tracing back to Graebner’s research on technology firms (Graebner 2004). Ranft and Lord (2002), Homburg and Bucerius (2006), and Schweizer (2005) performed an analysis based on case studies of several acquisitions involving six technology-oriented firms. Hence, we deemed it suitable to employ this analysis to meet our research objectives. While a literature review discusses technological acquisitions and the importance of the retention of the target firm’s CEO, a case study allows for a closer examination of data within a specific context, enhancing practical and theoretical relevance (Zainal 2007). This approach enables a more comprehensive understanding by delving into the influences of the target firm CEO on value creation and PMI success. Gathering experiences, perceptions, and behavior provides an overview of the business world and opens avenues for additional research (Tenny et al. 2022).

We gathered firsthand data from target firm CEO interviews and secondary data from publicly available sources, such as Chegg investor relations reports, financial reports, press releases, and industry analysis publications. When collecting specific information, we used Google as our primary search engine using coded search keywords including “Chegg acquisitions”, “Chegg industry”, or “Ed-Tech Market”. In addition, we referred to sources such as LinkedIn to analyze the retention period of the CEOs and the roles they performed in Chegg after the acquisition. In this paper, we utilized multiple data sources, a method known as triangulation, to enhance construction validity (Yin 2009). Additionally, we looked closely at Chegg’s expansion into a platform business, analyzed all acquisitions that accelerated the change, and compared Chegg with its competitors. By doing this, we combined pieces of information to identify clear patterns and to examine how they were related to the previous literature on technological acquisition and the importance of CEO retention in acquisitions.

4. Case Study and Analysis

We analyzed Cramster, Imagine Easy Solutions, InstaEDU, and Thinkful among the 14 firms Chegg acquired up to 2019. Our study requires case sampling, so we used a theoretical sampling approach. We chose this method to extend the new theory proposed in this study, namely that the CEO retention period affects PMI. Pettigrew (1990) pointed out that, due to the limited number of cases typically studied, it is sensible to choose extreme situations and polar types where the process of interest is “transparently observable” (Eisenhardt 1989). We selected these four cases from Chegg’s acquisition cases because they had the most evidence and reasonable connections. We chose to analyze Cramster and Imagine Easy Solutions as they are two of the most successful PMI cases. Both Cramster and Imagine Easy Solution’s CEO retention periods were longer than three years. On the other hand, the cases of InstaEDU and Thinkful are examples of unsuccessful PMI. Thinkful’s and InstaEDU’s CEO retention periods were shorter than three years. We concluded that Thinkful and InstaEDU’s CEO retention period was too short to yield successful PMI results.

The CEO of Cramster worked at Chegg for about five years after the acquisition in 2010. Chegg successfully pioneered the solution provision platform business with its acquisition of Cramster, resulting in successful domain creation. “Chegg Study” became Chegg’s primary service as an essential revenue model (Chegg 2023).

The CEO of Imagine Easy Solutions worked at Chegg for about three years after the acquisition in 2016. Chegg also successfully achieved domain extension with the acquisition of Imagine Easy Solutions and WriteLab. Chegg only provided solutions for questions uploaded by student users before its acquisition. By acquiring Imagine Easy Solutions, Chegg could provide citations and institute Chegg Writing.

The CEO of Thinkful worked at Chegg for two years after the acquisition in 2019. Chegg tried to achieve domain creation by acquiring Thinkful. Although Chegg sought to enter the adult education field by acquiring Thinkful, the CEO retention period was too short for a successful PMI.

The CEO of InstaEDU worked at Chegg for about two years after the acquisition in 2014. Based on the tutoring service of InstaEDU, Chegg introduced “Chegg Tutors” (Johnston 2015). Though we could measure its failure by the service closure of Chegg Tutors, it could not create value from this acquisition and even failed to maintain InstaEDU’s original business.

4.1. Successful Acquisitions

The acquisitions of Cramster and Imagine Easy Solutions are examples of successful PMI. Cramster’s acquisition resulted in domain creation, and the acquisition of Imagine Easy Solutions led to domain extension. This paper analyzed Cramster and Imagine Easy Solutions, which played a key role during Chegg’s deviation from its previous textbook rental model and merged into two of Chegg’s most popular businesses. Both acquisitions benefitted from mobilizing actions performed by the target firm’s CEOs.

4.1.1. Cramster

Before acquiring Cramster, Chegg was mainly a textbook rental service and was the leading company in this market. However, due to the rapid digitalization of education materials, it felt the need to change its business model (Chegg 2023). According to Chegg’s 2015 annual report, revenues from its print textbook business were declining continuously: 87% of its revenue in 2012, 79% in 2013, and 70% in 2014. After the acquisition and integration of Cramster into Chegg Study, 81% of its sales were from Chegg Services, and the remaining 19% was from its textbook business. Chegg Study constitutes the most significant percentage of Chegg Services revenue and is noted as its core business in Chegg’s annual reports and publishing.

Cramster, a social online homework help platform, played a crucial role in Chegg’s industry shift. It was founded in 2002 and integrated into Chegg Study in 2014. After the integration, Chegg could utilize Cramster’s resources and shift into the ed-tech industry via domain creation. As the first mover in the industry, Chegg could utilize the network effect as a competitive advantage over similar businesses.

Cramster developed Chegg Study by integrating Cramster’s “Step-by-step solution” program. Chegg Study consists of two services with subscription status, “Expert Questions and Answers” and “Textbook Solutions”. “Expert Questions and Answers” enables students to ask questions online and receive detailed expert answers. Regarding textbooks, “Textbook Solutions” gives students step-by-step assistance to answer questions in their textbooks.

Cramster’s resources could be utilized after the acquisition, facilitated by the contribution of Cramster’s CEOs. Cramster was co-founded by Aaron Hawkey and Robert Angarita, who both worked at Chegg for four to five years after its acquisition in 2010. Aaron Hawkey worked on the product and marketing team at Chegg until 2014, and Robert Angartia worked on the content team until 2013.

Chegg Study is enjoying its position as an industry leader because of the coordination between Chegg and Cramster. Co-founder Robert Angarita originally had the idea to hire well-educated relatives and freelancers from India to answer student questions (Adams 2021). After the integration, Chegg could utilize the same network of people to answer student questions and contribute to their database. More than 7786 Indians work to add value to Chegg Study.

This effort allowed Chegg to differentiate itself from its competitors, like Course Hero, a private company with a database of student answers (Adams 2021). Chegg’s database could be a competitive advantage over similar platforms due to its high-quality answers.

Notably, both CEOs and Chegg shared similar visions for the aftermath of the acquisition. “Chegg and Cramster share the same vision of providing students with value throughout their college experience”, said Dan Rosensweig, President and CEO of Chegg. “We are always striving to offer students the best tools to help them save time and money and get smarter, and Cramster is the natural fit to expand on our offering”.

“We’re very excited to become a part of Chegg and align ourselves with a market leader that continues to evolve to meet the needs of students everywhere”, said Cramster co-founder Aaron Hawkey. “We started Cramster to help students get unstuck when they need help most, and we look forward to expanding this vision with Chegg (2010)”.

Due to an alignment of interests and good resources, Chegg Study quickly became the center of Chegg’s business and adopted the most significant percentage of Chegg Services Revenue. This integration was smoother, considering Cramster and Chegg were both internet platforms that could maintain their niche customers after combining their platforms. Now, one million users share information on various subjects in Chegg Study. Students can upload lecture notes, prepare for exams, and work together to complete their homework.

4.1.2. Imagine Easy Solutions

Imagine Easy Solutions was a company that managed tools like Easybib, Bibme, Citation Machine, and Cite This For Me (Lardinois 2016). Those tools helped students create bibliographies and citations for writing assignments. Additionally, they ran teaching tools called Imagine Easy Academy and Imagine Easy Scholars to help students develop reading and writing skills.

Chegg acquired this company seeking to expand its business domain by providing citation service and programmatic advertising. Chegg’s primary goal was to support students struggling with writing (Chegg 2016). After that, they sought to expand their business model by providing solutions through Chegg Study and becoming a writing assistant by offering writing feedback in advance. Therefore, gathering the citation service would have been essential for Chegg. However, it is unclear whether Imagine Easy Solutions contributed to programmatic advertising because there is no noticeable evidence from Chegg’s advertisements.

Currently, Chegg is operating all Imagine Easy Solutions services without integrating the brand title. Those brands were the most essential part of Imagine Easy Solutions, as their leading service was to provide correct citations for each style. Therefore, Imagine Easy Solutions used to run those systems as a separate brand. However, after the acquisition, Chegg started to provide those services under Chegg Writing. Citation programs are now working as a subsidiary service for Chegg Writing.

Imagine Easy Solutions was co-founded by Darshan Somashekar and Neal Taparia in 2001, and they both worked for Chegg from May 2016 to May 2019 for about three years. Darshan Somashekar served as a vice president of product, expanding the writing tools to help improve student outcomes. Neal Taparia simultaneously served as the general manager and vice president at Chegg. Taparia’s highlights include acquiring two more companies, WriteLab and StudyBlue, for Chegg’s business unit and leading key partnerships, including one with Purdue University, a first for Chegg.

Chegg and Imagine Easy Solutions CEOs had similar visions and cultures for their companies. According to Darshan Somashekar, he stated that they were a good fit for each other, thus leading to a harmonious cultural integration. Chegg exerted considerable effort into integrating employees of the acquired company into the organization. For example, Chegg encouraged workers to communicate face-to-face by letting them travel worldwide to each other’s offices. These travels often led to events like dinners and happy hours, where people could easily get to know each other (Somashekar 2023). This accelerates coordination, which is a form of mobilizing action that could help the employees of Chegg and Imagine Easy Solutions become acquainted after the acquisition.

Before the acquisition process, Imagine Easy Solutions also went through internal reconstruction. While a large portion of the company was a “School Sales” Team, Chegg did not want to acquire the school sales business since their main customers were students. Prior to the acquisition, they had about 70 employees. However, through the acquisition process, their mission has been assimilated with Chegg, and the number of employees decreased to about 35. Twenty-five of them were fired, and ten of them moved to other companies.

Chegg successfully launched Chegg Writing in 2019 after a deeper investment in writing with the acquisition of WriteLab in 2018. The acquisition of Imagine Easy solution was a foundation for Chegg to enter the writing help business. Chegg Writing’s primary service involves supporting students with their writing assignments by providing citations and feedback. The citation services of Imagine Easy Solutions were well-optimized on the search engine due to the establishment of several domains. The success of Chegg Writing was based on the successful cultural integration of Imagine Easy Solutions, which has a vast scale of consumer classes that could flow into the mix of Chegg services.

Imagine Easy Solutions was acquired by Chegg in 2016. After Chegg launched the citation service under its name in the same year, there was an increase in Chegg’s net revenue since 2016. Chegg’s net revenue in 2016 was USD 254,090,000, and USD 255,066,000 in 2017. After the acquisition of WriteLab in 2018, Chegg launched Chegg Writing services in May 2019. Chegg’s total net revenue increased to USD 410,926,000 in 2019 from USD 321,084,000 in 2018. According to Chegg’s annual report, visitors have increased by 29%, from 3.1 million in 2018 to 3.9 million in 2019.

4.2. Unsuccessful Acquisitions

Chegg’s acquisitions of Student of Fortune, Campus Special, InstaEDU, and Zinch were classified as unsuccessful because they failed to incorporate the target firm’s resources and eventually closed the business. As observed from (

Table 1. Summary of research findings.

Core Business Integration	Target Firm	Retention Period	CEO Actions	Results
Successful	Cramster	3–4 years	Mobilizing action (Accelerating Coordination)	Domain Creation
	Imagine Easy Solutions	3 years	Mobilizing action (Accelerating Coordination)	Domain Extension
Unsuccessful	InstaEDU	2 years	CEO’s retention period was too short to implement effective integration.	Business Closure
	Thinkful	2 years	CEO’s retention period was too short to implement effective integration.	Business Maintenance

), the retention time of Student of Fortune, Campus Special, and InstaEDU’s former CEOs is shorter than three years. Zinch’s CEO’s retention time was three years, possibly indicating that short CEO retention time may have hindered the PMI process.

4.2.1. InstaEDU

InstaEDU was an online one-on-one tutoring site co-founded and led by Dan Johnston and Alison Johnston in 2011. The company endeavored to provide high-quality education without place and time restrictions (Johnston 2015).

After Chegg acquired InstaEDU, the two co-founders worked as part of Chegg: Dan Johnston as Group Product Manager in Learning Services and Alison Johnston as Director of Marketing in the same service department. After InstaEDU had changed into Chegg Tutors, the previous CEOs tried to use the service to advertise Chegg’s platform and expand Chegg’s reach of customers outside of book rentals and problem solutions (Johnston 2020).

Dan Johnston and Alison Johnston’s focus on advertisement would have aided the integration between InstaEDU and Chegg. As they were the previous CEOs of InstaEDU themselves, their ways of advertisement were effective (Johnston 2020). Customer engagement on the Chegg website increased as a result. Furthermore, Chegg Tutors had access to more than 13 billion student users from Chegg. The newly acquired company achieved a 103% growth three months after the acquisition (Buhr 2014).

Unfortunately, Dan Johnston and Alison Johnston both had relatively short retention periods. They remained in Chegg for only two years. Advertising about the new service and attracting new customers was manageable in those short two years. However, creating connections and retaining long-term customers demands more time. Although Chegg sustained its operations with Chegg Tutors after their departure, it ultimately ceased operations in 2021 due to shifting trends that favored chatbots over human tutors (Mascarenhas 2021; Min 2023). Chegg answered that they closed down Chegg Tutors as they saw a change in the ed-tech industry. They perceived that implementing chatbot services would be more effective than offering tutoring.

Chegg endeavored to achieve domain creation acquisition by acquiring InstaEDUin an attempt to expand their business into an online tutoring service and to attract customers to their core service, the Chegg Study Pack (Chegg 2014). However, the retention period of the former CEOs was too short for proper implementation. As a result, Chegg shut down Chegg Tutors, proving that this acquisition was a failure.

4.2.2. Thinkful

Thinkful, an online learning platform that provides courses in data science, UX/UI design, and data analysis, was founded in 2012 by Darrell Silver and Daniel Friedman. Chegg acquired the company in October 2019 for USD 80 million. It was Chegg’s third-largest acquisition (Prnewswire 2019). Dan Rosensweig, CEO of Chegg, said, “Students are increasingly looking to improve their professional opportunities by learning the most relevant job skills, either in school or soon after. Adding Thinkful courses to our suite of Chegg Learning Services will enable us to empower students to obtain in-demand, high-quality job skills for the fastest-growing job categories, with affordable prices.”

According to Chegg’s annual report, approximately 6.6 million students subscribed to Chegg Services after Thinkful’s acquisition in 2019, representing an increase of 67% yearly from 3.9 million in 2019. The net revenue increased from USD 410.9 million to USD 644.3 million in 2020. However, the leading cause of the increase in subscribers and revenue was the positive impact of the COVID-19 pandemic on the ed-tech industry. Since Thinkful was acquired in October 2019, insufficient time has passed to assess its impact on its performance in 2020. The ed-tech industry flourished during 2020. In this regard, the market size of the North American ed-tech industry alone increased from USD 24.85 to USD 27.05 billion from 2019 to 2020 (Fortune-Business-Insights 2020).

Chegg tried to achieve domain creation acquisition and expand its business in adult education by acquiring Thinkful. Chegg’s customers are mostly college students in their 20s with high turnover rates primarily due to graduation. However, Thinkful had a pool of customers who were, on average, in their 30s, half of whom did not have a college degree (McKenzie 2019). Through this acquisition, Chegg sought to expand its scope of customers.

Thinkful was added to the Chegg Service after the acquisition and can be accessed through Chegg’s online site in the career section. While Cramster later became Chegg Homework Help and Imagine Easy Solutions became Chegg Writing, Thinkful was not included in Chegg’s subscription pack, showing that Thinkful is not a part of Chegg’s core business.

In September 2021, there was a restructuring in Thinkful. The restructuring affected approximately 60 full-time and 100 part-time employees (Chegg 2021). At the end of 2021, Chegg recorded restructuring charges of USD 1.9 million related to one-time employee termination benefits. Over 160 employees were laid off, which may have impacted Thinkful and Chegg’s PMI process. Chegg lacked experience and knowledge in the coding bootcamp business. However, Chegg underwent a massive restructuring and lost Thinkful’s human resources and tacit knowledge.

Although four years have passed since its acquisition, the site remains independent. Unlike the two most representative, fruitful acquisitions of Cramster and Imagine Easy Solutions, this indicates that PMI is yet to be completed. The delay in brand integration hindered the achievement of PMI. In other words, the post-merger integration speed of Thinkful is slower than that of Cramster and Imagine Easy Solutions. Slow PMI process speed can impact the target firm’s momentum.

After the acquisition in 2019, Darrel Silver and Daniel Friedman—the prior CEOs of Thinkful—became Vice Presidents of Chegg’s Learning Service. They stayed in Chegg until January 2022. Thus, they were with Chegg for about two years and four months. This period is shorter than the retention period of the CEOs of Cramster and Imagine Easy Solutions. The CEOs of Thinkful left Chegg before completing the full integration of Thinkful. The short retention period may have hindered Thinkful’s PMI process and was insufficient for the target firm’s CEOs to perform sufficient managing or mitigation actions.

Table 2. Other Acquisitions.

Target Firm	CEO	Retention Period	Actions After Acquisition	PMI Success
CourseRank		2010-2014		Unsuccessful
Cramster (2010)	Aaron Hawkey	2010–2014	Served on the product and marketing team at Chegg.	Successful
	Robert Angarita	2010–2013	Served as director in Chegg after acquiring Cramster and then served on Chegg’s content team from 2010 to 2013.
3D3R (2011)	Ohad Eder	2011–2017	2014–2016: VP of R&D. 2013–2014: Director, Head of Mobile. 2011–2013: Director of Product Engineering–eTextbook Reader.	Successful
Notehall (2011)	Justin Miller	2011–2013	Served as director of product management and notes division.	Successful
	Sean Conway		Served as a product leader and director of campus saturation and worked to help grow Chegg’s digital education business.
Student of Fortune (2011)	Sean McCleese	2011–2013	Product director.	Successful
Zinch (2011)	Mick Hagen	–	–	Unsuccessful
	Ann Dwane	2011–2015	Served as Chief business officer.
Campus Special (2014)	Chau Nguyen	–	–	Unsuccessful
InstaEDU (2014)	Alison Johnston	2014–2016	Served as business lead for tutoring.	Unsuccessful
	Joey Shurtleff		Served as the technology leader for tutoring.
	Dan Johnston		Served as a leader in the learning services division.
Internships.com (2014)	Paul L H Ouyang	2014–2020	-	Semi-Successful
	Matt Carminio	2014–present	CEO of Internships.com inside Chegg.
Imagine Easy Solutions (2016)	Darshan Somashekar	2016–2019	VP of product, writing tools.	Successful
	Neal Taparia		General Manager/Vice President.
Cogeon GmbH		2017–2018		Successful
WriteLab (2018)	Matthew Ramirez	2018–2021	Director of product, writing AI.	Successful
StudyBlue (2018)	Christopher Klundt	2018–2021	GM of StudyBlue/Chegg Prep and VP of Content and Knowledge	Successful
Thinkful (2019)	Darrell Silver	2019–2022	VP of Learning Services.	Unsuccessful
	Jake Kuehner	-	-

shows all Chegg acquisitions conducted until 2019. Target firms acquired after 2019 are excluded to more effectively measure PMI success over a more extended period.

Given the above information, the acquisitions are classified below. “PMI Success” was calculated according to the usefulness of the target firm resources in the business and how its outcome has influenced Chegg’s financial revenue. The higher the contribution of the resource to the business, the more successful the PMI result.

Figure 1 includes information on Chegg’s 14 target firms based on PMI results and CEO retention period. The PMI result is divided into two sections: PMI Success and PMI Failure. PMI success has three categories, according to Haspeslagh and Jemison (1991), and two for PMI failure. After precisely observing the status of each target firm, we categorized each company into five different conditions.

Acquired companies such as Cogeon GmbH, Cramster, and Internship.com went through domain creation by introducing the company to an entirely new field of business. Specifically, Cramster led Chegg to the field of ed-tech business by launching Chegg Study. Imagine Easy Solution and WriteLab belong to the domain extension category. After the integration, these companies were transformed into Chegg Writing, providing their main resource to a new business. Chegg Writing is a domain extension business since Chegg Study was a pioneer business for Chegg’s entry to the ed-tech area. StudyBlue contributed to domain strengthening as it provided technological resources supporting additional services of Chegg Study. It was not essential to business operations, but it still brought additional value to Chegg. The paper states that a CEO retention period longer than three years is necessary for successful PMI (Post-Merger Integration) outcomes. However, some companies with successful PMI results, such as Cogeon GmbH, had CEO retention periods of less than three years. Since the CEO retention period is not the only crucial factor in the integration process, other factors influencing corporate integration should be explored as well. In this case, these reasons can be found in the type of resources Chegg needed at the time of acquisition and their business expansion method. As shown in

Table A1. Acquisitions sorted by resource being acquired.

Resource Being Acquired	Target Firm	Date of Acquisition	Retention Period	Resource Being Acquired (Detailed)	PMI Success
Internet Software and services (Study aid)	Cramster	8 December 2010	4 years	Online homework help service	Successful
	Notehall	1 June 2011	1.8 years	Class notes sharing marketplace	Unsuccessful
	Imagine Easy Solutions	2 May 2016	3.1 years	Citation service and programmatic advertising	Successful
	StudyBlue	2 July 2018	3.3 years	Crowdsourced content and learner data	Successful
Internet Software and services (Academic support)	Courserank	19 August 2010	4.1 years	Online service that helps course selection	Unsuccessful
	Student of Fortune	19 August 2011	2.3 years	Online tutorial marketplace	Successful
	Zinch	15 September 2011	4 years	Digital network for college information (Scholarship, etc.)	Unsuccessful
	Campus Special	17 April 2014	–	Online student deal platform	Unsuccessful
	InstaEDU	3 June 2014	2 years	On-demand tutoring marketplace	Unsuccessful
	Internships.com	2 October 2014	6 years (or more)	Internship marketplace	Semi-Successful
Education Service	Cogeon GmbH	18 October 2017	0.8 years	Mathematical problem-solving service and application	Successful
	WriteLab	16 May 2018	3.1 years	Writing revision service	Successful
	Thinkful	4 September 2019	1.3 years	Tech education	Unsuccessful
Information Technology	3D3R	14 November 2011	6 years	Software development and consulting	Successful

Acquisitions sorted by resource being acquired, Cogeon GmbH had resources related to mathematical problem-solving, learning services and applications (see Appendix B). At the time of acquiring Cogeon GmbH, Chegg had a clear objective of launching the Chegg Math service, which contributed to a more successful integration.

Within PMI failure, Notehall and Thinkful were able to maintain their preexisting business but failed to create synergy with Chegg’s resources. Student of Fortune, Campus Special, InstaEDU, CourseRank, and Zinch could not sustain their preexisting business and failed to create value after the acquisition. CourseRank and Zinch each had CEO retention periods of 4.1 years and 4 years, respectively. In the case of CourseRank, Chegg acquired the company to help students plan their academic careers. However, after operating the service, they realized there was not significant demand from students, leading to the business closure. This can be seen as an unavoidable failure due to insufficient demand rather than a failure of the acquisition itself. For Zinch, a digital network used by high school students and college recruiters, Chegg acquired it to boost its textbook rental service. Ultimately, Chegg’s textbook rental service lost focus as its main business, causing Zinch’s business to disappear as well.

5. Discussion

This paper explores the impact of CEO retention on the PMI process, specifically focusing on Chegg’s acquisitions. We studied the 14 acquisitions that Chegg overtook up until 2019, then selected the four most prominent acquisitions to explore CEO actions during the PMI process. Through this investigation, we cultivated a model to evaluate PMI success.

Investigating target firms could enhance our understanding of the acquisition strategy aligned with the company’s resources. Notably, we observed variations in CEO retention periods among the companies, which were linked to the success or failure of the acquisition. These acquisitions exhibited diverse cases of domain strengthening, domain expansion, and domain creation that varied according to CEO actions during the retention period.

However, there were some exceptions, such as the acquisitions of Notehall and Zinch, which did not follow the model. The success of PMI can be affected by elements other than the CEO retention period, such as post-acquisition innovation, resource reconfiguration, target selection, and key target firm’s engineer retention.

Notehall is a successful acquisition as it later became the foundation for Chegg Study despite its CEO retention period being only two years. Zinch retained its CEO for four years, but its outcome was unsuccessful. Chegg chose to close down the business four years post-acquisition as Zinch’s business model did not align with Chegg’s vision or business model.

Cases such as Notehall and Zinch do not follow the proposition that a longer period of CEO retention is more likely to bring a successful PMI result. Our study only focuses on a total of 14 acquisitions Chegg made until 2019. The sample size may be too small to ensure generalizability. To enhance generalizability, future research should explore contextual factors that could influence the relationship between CEO retention and acquisition success.

Using these analyses, we developed a model describing the causality between CEO retention periods and PMI success. Given the CEO’s pivotal role in steering the company, leadership changes can significantly affect the entire company in the context of mergers and acquisitions. Chegg’s M&A portfolio comprises both positive and negative cases, with the duration of the target firm CEO’s retention period varying each time (see as Figure 2).

This model is premised on the notion of an optimal timeframe for CEO retention to result in core business integration between the acquiring and acquired firm, which refers to PMI success (see Figure 2). Most target firms with CEO retention periods of fewer than three years failed to generate additional value or even encountered the closure of preexisting businesses after the acquisition with Chegg. However, targeted companies with a three-year CEO retention period or more could capture the additional value within the acquisition. Positive business outcomes, such as domain creation, extension, or strengthening, were interpreted as PMI success. These CEOs successfully integrated their resources by taking mobilizing actions during the target firms’ CEO retention period.

Through this research, we could categorize several of Chegg’s target firms into successful and unsuccessful acquisitions. The criterion for determining the success or failure of these acquisitions was whether the target firm’s resources were crucial for business renewal within Chegg. As explained in the model, Cramster and Imagine Easy Solutions are successful acquisitions resulting from the mobilizing actions of their CEO. Cultural and resource integration between the acquired and acquiring companies played an essential role in enabling Chegg to perform domain creation and extension, eventually leading to additional value generation. According to Ranft and Lord’s (2002) study, sharing technologies and capabilities between the acquirer and acquiree is not straightforward because of differing characteristics. Successful integration requires enough time and effort to build trust, alignment, and control rather than pursuing rapid changes (Napier 1989). Therefore, the PMI success of these two companies results from having an appropriate CEO retention period. On the other hand, InstaEDU and Thinkful had short CEO retention periods, so they failed to attribute effective integration. Thinkful could only maintain its original business, and InstaEDU faced closure after the acquisition. They needed more time to achieve a successful PMI.

Our study encountered certain limitations that proved challenging. Firstly, restricted access to detailed financial data for Chegg and its target firms limited our ability to ascertain the impact of each acquisition on revenue gains or losses, as the target firms were private companies with no public financial records. Secondly, this study lacks generalizability in the ed-tech industry, focusing on Chegg and its acquisitions. To address this limitation, a brief examination of Chegg’s main competitor, Udemy, was conducted and included in

Table A2. Udemy’s acquisitions.

Core Business Integration	Target Firm (Acquired Year)	CEO Retention Period	Growth in Revenue
Successful	CorpU (2021)	2 Years–Present	2021: USD 515,657 2022: USD 629,097
	Sunnytrail Insight Labs (2016)	5 Years	Series D

Note. The data for Udemy is from Udemy, Incorporated. 2023. Form 10-K. Available online: https://investors.udemy.com/static-files/a8e017e8-b30b-419a-aad4-dc2af8e7c5f7 (accessed on 16 May 2024).

(see Appendix C). Lastly, obtaining detailed information about the actions taken during the CEO retention period posed a challenge. Despite our attempts to gather internal information from the acquired companies, only the CEO of Imagine Easy Solutions agreed to an email interview, leaving us with limited insight into other target firms. Consequently, we relied on sources such as annual reports with approximate financial data and news reports.

Due to these constraints, we could not propose a comprehensive analysis of the CEO retention period’s significance in PMI success. Our study highlights that having an appropriate duration of the CEO retention period for the PMI process is essential. This paper, which offers case studies of each Chegg acquisition, may not readily apply to other PMI cases, challenging generalization and practical implications. In the business industry, the unique context of an acquisition or private situations within the company might have a decisive effect on different cases.

For further research, we expect other researchers studying this topic to compile the statistics of different cases. We recommend investigating various companies concerning the M&A process and verifying financial data transition before and after PMI. Moreover, a stock analysis of each company will allow them to figure out the financial transition before and after the acquisition. This method would be very effective for the researchers to understand the impact of the CEO retention period on the PMI process and detect the success and failure of the acquisition.

6. Conclusions

Chegg, an already successful online educational platform in the United States, is positioned for further growth on a global scale. To accomplish this expansion, the company strategically employed mergers and acquisitions, which, overall, have contributed positively to its success.

Nevertheless, it is crucial to acknowledge that not all post-merger integrations have yielded success. This study delved into the multifaceted factors influencing post-acquisition integration processes to enhance efficiency.

Existing literature has consistently highlighted three primary determinants of PMI success or failure: cultural integration, the speed of integration, and the level of engagement of the target firm’s CEO. Among these factors, this paper emphasized the retention period of the target firm’s CEO, theorizing a positive correlation between CEO retention time and post-acquisition integration success. We investigated this assertion by utilizing Haspeslagh and Jemison’s (1991) theory of domain creation, extension, and strengthening to determine PMI success.

In light of a relatively brief interval between acquisitions, our analysis substantiates the anticipated positive correlation between the CEO retention period and post-acquisition integration success. It becomes evident that Chegg failed to realize opportunities for domain strengthening when dealing with companies where CEOs remained in their roles for less than three years post-acquisition. Conversely, Chegg could only maintain the status quo for acquisitions with shorter CEO retention periods or, in some cases, opted to discontinue the acquired business altogether. Our research also delved into the specific strategies and practices associated with longer CEO retention periods that have contributed to integration success.

The potential contributions of this research are twofold. Academically, it seeks to strengthen existing knowledge in CEO retention and its influence on PMI success by providing empirical evidence. In a practical sense, it aspires to assist organizations contemplating or undergoing acquisitions by offering strategic guidance and influencing related future decision-making. As the demand for technological acquisitions increases, insights from this study will be valuable for businesses navigating the complex M&A terrain.