intercultural aspects of mergers & acquisitions · intercultural aspects of mergers &...

Intercultural Aspects of Mergers & Acquisitions

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Foreword

As part of the international degree course “Baltic Management Studies”

at the University of Applied Sciences in Stralsund, we, the students Carolin Boden,

Elisabeth Guth, Nelly Heinze and Sarah Lang, wrote this work as a part of the

course “Intercultural Leaderships and Teams” under the guidance of Prof. Dr.

Jürgen Rothlauf. In our second semester we were given the possibility to choose

one of the suggested topics of the subject area “intercultural management”. This

assignment is supposed to challenge the students’ ability to write in a scientific

manner and is also a preparation for the final bachelor thesis, which is to be

written in the eighth semester of the curriculum.

We decided to choose this topic because mergers and acquisitions (M&A) has

become a mundane expression, used daily in the media. In order to operate

successfully in a global economy, corporations have become transnational and

have to perform at a multinational level. Therefore, we decided to analyze M&A in

a cultural context. After explaining the importance of intercultural management, we

gave an insight about the terms merger and acquisition to establish a background

for our further work, the cultural analysis. In order to get an own impact and to be

able to assess the real situation, it was necessary to conduct a study on this topic.

We created a questionnaire with 10 different questions dealing with the importance

of intercultural management for M&A transactions which was sent to consultant

companies and experts working in the field.

We would like to warmly thank everyone who took the time to participate, made

comments and even provided us with additional material or offered assistance!

Since we have promised to treat the data anonymously, we cannot thank any

company by name, but we would like them to know that their help has been greatly

appreciated. Moreover, we also want to give a special thanks to our mentor Prof.

Dr. Jürgen Rothlauf, who kindly offered advice and greatly helped us during the

consultations.


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May our assignment be one small brick on the long road of creating effective

cultural understanding and a help for estimating the real importance of the cultural

background while the M&A process.


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Table of Contents

Foreword ............................................................................................................ 2

Table of Contents .............................................................................................. 4

1. Study on the importance of intercultural training in case of international

M&A................................................................................................................. 5

1.1. Introduction ............................................................................................ 5

1.2. Analysis of the Questionnaire ................................................................ 7

1.2.1. Question 1) What is the most common reason for M&A? ................ 7

1.2.2. Question 2) When companies consider Mergers & Acquisitions, how

would you rate the importance of the “strategic fit”, the “financial fit”

and the “cultural fit” of the companies? ............................................. 9

1.2.3. Question 3) Do cultural differences often prove to be an obstacle? ..

...................................................................................................... 11

1.2.4. Question 4) Please rate the importance of intercultural management

in case of international Mergers and Acquisitions. .......................... 12

1.2.5. Question 5) Which activities are most often used for intercultural

training? .......................................................................................... 13

1.2.6. Question 6) How much time is usually scheduled for intercultural

training? .......................................................................................... 16

1.2.7. Question 7) Would you consider the intercultural training as sufficient

in most cases? ................................................................................ 18

1.2.8. Question 8) When would you recommend starting with the training?

...................................................................................................... 18

1.2.9. Question 9) What is the most common reason for the failure of

Mergers and Acquisitions? .............................................................. 20

1.2.10. Question 10) How would you rate the influence of cultural

misunderstandings on the failure of M&A? ...................................... 22

1.3. Conclusion ........................................................................................... 23


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1. Study on the importance of intercultural

training in case of international M&A

1.1. Introduction

In order to create an impact and to be able to assess the real situation, it was

necessary to conduct a study on this topic. We decided to contact experts in this

field: People who deal with M&A on a regular or even daily basis but are not

directly involved with the companies. Consultants offer their services to companies

conducting mergers or acquisitions and experience and are likely to know about

problems that often occur and might be able to rate the importance of intercultural

training for M&A and also evaluate the influence of intercultural misunderstandings

on the failure of M&A. Moreover, there are people who analyze transactions but do

not consult other companies directly. Since they are not “personally” involved in an

M&A they would also have a more objective opinion.

We created a questionnaire with 10 different questions dealing with the importance

of intercultural management for M&A transactions. In order to make answering our

questionnaire as simple as possible for the people involved the questions were

included in an PDF file with the option to check boxes, fill in information, save data

and even send it back automatically. For consulting companies/experts in German

speaking countries we had a German version available. This questionnaire was

then send via email to a number of different consulting companies all over the

world, which were at least to a certain degree specialized on M&A consulting. The

addresses were obtained from the internet. Of course we also included a covering

letter in which we kindly asked the recipients to sacrifice a few minutes of their

time to answer our questionnaire, explained who we were and also offered to

share our results. The reactions to our request were quite different. Certainly, one

has to consider the fact that many companies receive a vast number of emails and

have to cull so that we did not receive any answer at all in most cases.


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However, the replies we got were generally very positive. Some people showed a

great interest in our study, shared helpful comments, attached some additional

documents and even offered help and assistance. We greatly appreciate that and

would like to thank everyone for that. Most people who filled in the questionnaire

were also interested in receiving the results. We also got a few answers that they

would not deal with that specific topic or would not feel qualified enough to answer

our questionnaire. Generally, the response rate was higher for consulting

companies who also consult on or deal with intercultural affairs rather than only

strategic and financial matters.

In our first attempt we contacted around 70 companies/people but only received

four completed questionnaires and we therefore decided to send around a kind

reminder a few weeks later. Since this number was not sufficient at all for a

statistical analysis and evaluation we sent it to other people and consulting

companies. We also filled in contact forms and asked to be allowed to send them

our questionnaire. Finally, we started a third attempt in the beginning of August.

Generally, the response rates for the second and the third attempt were

comparably higher than for the first one. In the end we received 22 completed

questionnaires. Mainly consultants participated but also two professors from

different universities who deal with the topic as well as intercultural experts.

We would like to warmly thank everyone who took the time to participate!


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On this map the list of countries and the individual number of returned

questionnaires can be seen:

Figure 1: List of participating countries1

1.2. Analysis of the Questionnaire

1.2.1. Question 1) What is the most common reason for

M&A?

Before focusing on the importance of the (inter)cultural part of Mergers and

Acquistions, we wanted to examine why companies choose Mergers and

Acquisitions as a strategy.

Generally, the decision is rather based on economic than on personal reasons2

and no manager would conduct an M&A out of philanthropic motives to save

1 Own illustration


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another profitless company from bancruptcy. The aims of the shareholders, who

are more interested in an increased company’s value, are also different from the

managers’, who are focused on an increased income and power as well as a safe

job.3

A majority of almost 60% of our recipients opted for “Gaining a better market

position” as the most common reason for M&A transactions. Acquiring or merging

with another company allows the two parties to combine their market shares.

Moreover, when both companies have been working in the same field, the number

of competitors is reduced by the transaction and in case companies have not been

competing, new market shares in a new field/area can be gained.

“Maximising profit” is also related to this, since a better market share should also

result in a higher profit. However, reduced cost, e.g. administrative, production and

personnel, combined skills and technologies, economies of scale,4 etc. can

contribute to a higher profit. In our questionnaire, more than 20% chose this

option.

“Others” came third with 13.6% and this includes “growth” as well as a

combination of factors.

Less than five percent thought the “integration of new product ranges” to be the

most common reason. An example for this consideration might be the acquisition a

company which has already developed a product (range). This could be more

cost-effective than developing similar products.

No-one thought “promotion of new technologies” to be very important for the

initiation of new M&A transactions.

2 Merger and Acquistion Market is thriving, Westchester County Business Journal, Vol. 39 Issue

32, p. 6, 2000, New York 3 Glaum, M.,/ Hutzschenreuter, T (2010).: Mergers & Acquisitions – Management des externen

Unternehmenswachstums, p. 55, Kohlhammer, Stuttgart 4 Mergers and Acquistions, International Value Addes Researchers, JN Heerlen, found at:

http://www.i-var.com/images/pdf/mergers%20and%20acquisitions.pdf [viewed 2011/08/31]

http://www.i-var.com/images/pdf/mergers%20and%20acquisitions.pdf


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We are aware of the fact that the individual reasons for M&A are as diverse as the

companies themselves, however, the result shows that they are generally initiated

by the aim to raise the profit and strengthen and improve the company’s economic

situation.

Figure 2: Question 1) What is the most common reason for M&A?

Others:

- There is no single answer that applies to all cases

- Growth

- Different visions, methodologies and strategies

1.2.2. Question 2) When companies consider Mergers &

Acquisitions, how would you rate the importance of

the “strategic fit”, the “financial fit” and the “cultural

fit” of the companies?

This second question was meant to analyze the importance of the cultural fit of

companies considering a merger or acquisition in comparison to the traditionally

more business-related factors, strategic and financial fit. For all three options our

respondents could choose between “Very important”, “Important” and “Less

important”.

59,1%

4,5%

22,7%

0,0%

13,6%

Gaining a better market position

Integrating new product ranges

Maximizing profit

Promotion of new technologies

Others


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The strategic fit describes the similarities between the companies, matching goals5

and common experiences but also on the relatedness in terms of product

markets6. Financial fit refers to financial concepts of both sides and the analysis of

the financial and the profit situation, what would also be relevant for the Financial

Due Diligence.7 Will these concepts fit together or will the discrepancy be too big?

The cultural fit describes the degree of compliance of values, practices8, beliefs,

attitudes and behaviors between employees and the organization9 but can be also

used for the different organizations in M&A. A Cultural Due Diligence can help

identifying the own as well as the other culture, show similarities and reveal

potential risk factors.

Figure 3: Question 2) When companies consider M&A, how would you rate the importance of the

strategic, financial and cultural fit of the companies?

5 http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-14 [viewed 2011-08-31]

6 Haagedorn, J. Duysters, G. (2002): The Effect of Mergers and Acquisitions on the Technological

Performance of Companies in a High-tech Environment, Vol. 14 Issue 1. London: Technology

Analysis &Strategic, p.70 7 Glaum, M., Hutzschenreuter, T (2010).: Mergers & Acquisitions – Management des externen

Unternehmenswachstums. Stuttgart: Kohlhamer, p. 124-125 8 http://www.grosse-hornke.de/glossar.html [viewed 2011-08-19]

9 http://www.eventrecruitment.com.au/articles/mice%20DEC07%20Recruitment.pdf [viewed 2011-

08-19]

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

Strategic Fit Financial Fit Cultural Fit

86,4%

50,0%

27,3%

13,6%

50,0%

40,9%

0,0% 0,0%

31,8%

Very important

important

Less important

http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-14

http://www.grosse-hornke.de/glossar.html

http://www.eventrecruitment.com.au/articles/mice%20DEC07%20Recruitment.pdf


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The strategic fit was considered “very important” by the vast majority of 86% and

the rest opted for “important”. Whereas none of them rated neither the strategic

nor the financial fit as “less important”. For the latter the opinions were

homogenously distributed between the first two options.

For the cultural fit the situation looks different, since it was considered “less

important by almost one third. The majority chose “important” and around 27% the

first possibility.

Therefore we can conclude the cultural fit is generally appraised less important

than the financial and especially the strategic fit. The importance of the strategic fit

was also a result of the CEO Survey: Mergers and Acquisitions (1997) conducted

by Bain & Company during the Business Week Symposium of Chief Executive

Officers in the USA10. 94% of all respondents considered the strategic fit to be a

very important factor for the success or failure of an M&A transaction.

1.2.3. Question 3) Do cultural differences often prove to be

an obstacle?

Even though many companies do not consider the cultural fit as important as the

strategic and financial fit – or even far less important, the experts agree that

cultural differences prove to be an obstacle when conducting an M&A. Less than

10 percent chose “No”.

10 http://www.bain.com/publications/articles/ceo-survey-mergers-acquisitions-the-1997-business-

week-symposium-of-ceos.aspx [viewed 2011-08-19]

http://www.bain.com/publications/articles/ceo-survey-mergers-acquisitions-the-1997-business-week-symposium-of-ceos.aspx

http://www.bain.com/publications/articles/ceo-survey-mergers-acquisitions-the-1997-business-week-symposium-of-ceos.aspx


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Figure 4: Question 3) Do cultural differences often prove to be an obstacle?

That already shows that there must be a contradiction between the companies’

considerations beforehand and the situation during the M&A process when these

cultural differences might result in slowing down the process or maybe even

bringing it to a halt.

1.2.4. Question 4) Please rate the importance of

intercultural management in case of international

Mergers and Acquisitions.

We then asked the respondents to rate the importance of intercultural training

during international mergers and acquisitions on a scale from 1 (very unimportant)

to 6 (very important). Less than ten percent thought intercultural training to be

quite or even very unimportant (1-2). One third chose 4 and 5 and the majority of

almost 60 % considered it to be very important.

90,9%

9,1%

Yes

No


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Figure 5: Question 4) Please rate the importance of intercultural management in case of

international Mergers and Acquisitions.

An average score of 5.09 was achieved, which shows that overall our respondents

assess the intercultural training as very important. This also shows a discrepancy

between the results of the second question which shows that the cultural fit is

considered often rather less important by the companies. Intercultural training

could, however, help improving the cultural fit by creating an understanding and

acceptance.

1.2.5. Question 5) Which activities are most often used for

intercultural training?

(More than one answer possible)

Intercultural training involves a number of different activities, from rather passive,

like briefings, to more participative ones, e.g. role plays.11 Generally, a distinction

can be made between information-, culture- and interaction-orientated training.12

However, which ones do companies choose during a merger or acquisition? Since

11

Rothlauf, J. (2009) Interkulturelles Management, 3rd edition, München: Oldenbourg, p. 302 12

Ibid

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

Rating of the importance - Average rating: 5,09

4,5% 4,5% 0%

18,2% 13,6%

59,1%

1 (very unimportant)

2

3

4

5

6 (very important)


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in most cases more than one training method is employed, it was possible to tick

more than one answer.

The activities which seem to be used most often are staff briefings. Of course they

can differ in length and intensity but it is generally a lecture from an expert or/and

superior informing the staff about things that might change and things one has to

take care of when dealing with people from the other culture. The staff might also

get the chance to raise questions. Almost 70% of the recipients chose staff

briefings.

Intercultural team buildings came second with a difference of approximately five

percent. When companies merge or one company is acquired by another, this

often results in people from different cultures having to work together in teams.

Like everywhere else cultural differences can lead to misunderstandings and a

stagnation of work. Intercultural team buildings aim at helping teams to find

similarities, to understand their differences, to overcome their disagreement and to

find a common ground on which to base the teamwork. In the end, the team

should be able to work more effectively- and productively and use intercultural

synergy effects.13 This form of intercultural training is far more participative since

people work directly together with people from other cultures.

Respectively 50% opted for coaching for managers and skill training for

intercultural communication and negotiation as often used activities. The former

aims at training the people who have to deal with the other side first and

intensively in order to agree on the terms of the contract and find a common goal

and strategy. If they fail the whole transaction is most likely to fail as well.

Therefore they might be the first ones to receive intercultural training specifically

adapted to the upcoming challenges and their background. Moreover, language

lessons can be involved. The latter acknowledges the obstacles and different ways

that communication and negotiation can be for the success of an M&A. In order to

13

http://www.kwintessential.co.uk/cultural-services/articles/intercultural-teambuilding.html [viewed

2011-08-29]

http://www.kwintessential.co.uk/cultural-services/articles/intercultural-teambuilding.html


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resolve conflicts and find agreements, it is necessary to create shared

understandings. Nike Carstarphen also called conflict resolution “the art and

science of relationship building and agreement building.” 14

Less than one fourth of the people questioned thought role plays to be among the

most popular intercultural training activities for M&A transactions. Situations which

might occur when dealing with people from the other company can be trained,

explanations, why the counterpart would react in a certain way, can be given and

the appropriate behavior can be practiced. This might involve apparently obvious

things like greetings and small talk. Afterwards real-life situations can be handled

more easily and confidently.

Less than ten percent chose the option “others” and listed intranet, e-learning,

language and mobility as intercultural training activities. Of course the intranet and

e-learning offer many possibilities for self-studying and the opportunity to broaden

one’s mind and gain more knowledge for interested people apart from the

compulsory training. However, the effectiveness depends on people’s self-

discipline and maybe even their willingness to spend their free time on that.

Language training is a very important point which might also be integrated into

other activities, e.g. the coaching for managers. It is necessary to have a common

basis of communication but also to have at least a basic knowledge of the

counterpart’s mother tongue, especially for executives. The term “mobility” might

involve a number of different activities but in this case it is most likely to be a visit

of the other company in order to gain a first-hand impact.

Only one person (4.5%) thought that there are no intercultural training activities

used for most international M&A.

One can conclude that for the vast majority of international M&A transaction some

kind of intercultural training is deployed. Despite the fact that certain activities, e.g.

staff briefings seem to be used rather frequently, the specific choice of intercultural

training methods used has to be adapted to the individual needs and prior

experiences of both companies. Most training methods are also most likely to be

14

Carstarphen, N. (2004): Intercultural Communication and Diplomacy, Slavik, H. (Ed.). Malta: Diplo Foundation, p. 177


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deployed separately for each side instead of combining them, like for intercultural

team buildings.

Figure 6: Question 5) Which activities are most often used for intercultural training? (More than one

answer possible)

Others: intranet, e-learning, mobility, language

1.2.6. Question 6) How much time is usually scheduled for

intercultural training?

Intercultural training cannot only differ in the choice of training methods but also in

the length of time scheduled for it. Similar to the prior question there would be no

answer suiting all cases. However, we wanted to determine a generalized result.

We only obtained 21 answers, since one person stated it would be impossible to

give a universal answer. When “none” was chosen for question 5, there would be

also “none” for this question.

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

68,2%

22,7%

63,6%

50,0% 50,0%

9,1%

4,5%

Staff briefings

Role plays

Intercultural team buildings

Coaching for managers

Skill training for intercultural communication and negotiation

Others

None


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Almost 50% of our recipients estimated the training in most cases to last up to one

single day. Less than 30% chose up to one week and 19% opted for more than

one week. There was a remaining approximate five percent resulting from

question 5 for “none”.

Figure 7: Question 6) How much time is usually scheduled for intercultural training?

A length of up to one day or even only a couple of hours seems to rather short and

indeed a minimum duration of three days is actually suggested by experts.15

Training which lasts one day or less is most likely to be rather superficial and does

not offer any real possibilities for reflection and further coaching.

Most certainly, intercultural training is expensive for the companies and during that

time staff and manager cannot fulfill their normal duties and there is no need for

every single employee to receive intensive intercultural training. However, once

people are involved in the M&A transaction and have to deal with “the other side”

the money invested in their intercultural training will be far less than the loss in

case of a failure of the M&A due to cultural misunderstandings.

15

Guo, X. (2008): Intercultural training models for U.S. businesses in China, p. 24, ProQuest

Information and Learning Company, Ann Arbor

47,6%

28,6%

19,0%

4,8%

≤ 1 day

≤ 1 week

> 1 week

None


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The more the languages and cultures are different, the more time has to be spent

on intercultural training, and vice versa. It also depends on previous trainings and

experiences with these cultures of the companies.

1.2.7. Question 7) Would you consider the intercultural

training as sufficient in most cases?

We furthermore wanted to find out whether the intercultural training during most of

the M&A transaction would be sufficient to prevent unnecessary cultural

misunderstandings.

An outweighing majority of more than 80% did not consider it to be sufficient. This

also relates to the prior question where also almost 50% opted for an average

length of the intercultural training in the companies of up to one day, despite the

fact that three are advised by experts.

Figure 8: Question 7) Would you consider the intercultural training as sufficient in most cases?

1.2.8. Question 8) When would you recommend starting

with the training?

There are several possibilities when to start the intercultural training, since the

M&A transaction can be divided into three different phases: Preparation -,

18,2%

81,8%

Yes

No


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Transition - and Integration Phase16. The terms Pre-Merger -, Transition - and

Post-Merger Phase can also be found.17 When would the experts recommend

starting with the intercultural training?

The majority of almost 64% recommends starting the training during the

preparation phase. In this phase an analysis of the own company and the

competitive environment is conducted and a strategy, criteria and the aim are

developed.18

The transition phase includes contacting, negotiating, evaluations, the Due

Diligences and the conclusion of the contract.19 Approximately 14% of

respondents would start the intercultural training in this phase.

For the last phase, the integration phase, about 22.7% advise to start the training

only then. It involves the merging of the different organizations, corporate cultures,

leadership styles, etc. The integration process is especially difficult and crucial for

the success of the deal.20 Now the rest of the staff, not only the executive

managers, is also involved.

Figure 9: Question 8) When would you recommend starting with the training?

16

Rothlauf, J. (2009) Interkulturelles Management, 3rd edition, München: Oldenbourg, p. 97-98 17

Bischoff, J. (2007) Nachhaltiges Change Management, Keuper, H., Groten, H. (ed.). Wiesbaden: Gabler Verlag, p. 64 18

North, K., Blanco, A. (2003): Wissen fusionieren – Wie Wissensintegration den Erfolg von Mergers & Acquisitions unterstützt, in: New Management, Vol. 4/2003, p. 37-38 19

Ibid. 20

Ibid.

63,6% 13,6%

22,7%

Preparation Phase

Transistion Phase

Integration Phase


Seite 20

One can conclude that it would be best in most cases to start the training during

the preparation phase. It might not be necessary to conduct staff briefing on

intercultural issues but it would be important to train the managers negotiating and

executing the deal and later involve the rest of the staff.

1.2.9. Question 9) What is the most common reason for

the failure of Mergers and Acquisitions?

M&A transactions can be a great success and result a higher turnover and

advanced or even new market share but it can also turn out to be quite the

opposite. Therefore it is important to analyze the reasons for the failure of M&A to

then evaluate the importance of cultural misunderstandings and maybe even the

lack of intercultural training. Naturally, the specific circumstances are different for

every merger or acquisition but it is necessary to generalize. We offered five

different options as well as the possibility to add an own one.

The two least important factors were financial problems, which were not chosen at

all, and personal difference was only considered to be influential by approximately

ten percent of all respondents. Of course, personal differences of the executive

managers who were supposed to be cooperating were meant. They could not

overcome their aversions and find and work for a common goal. Nevertheless,

these issues seem to be solvable for the majority of companies. However, different

economic goals and cultural misunderstandings seem to play a much more

important role and almost 30% opted for one of these two options.

The remaining third chose “Others”. The additional answers given can be summed

up as unfulfilled goals and expectations, a discrepancy between the strategies

which turned out to be too big and a combination of factors.


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Figure 10: Question 9) What is the most common reason for the failure of Mergers and

Acquisitions?

Others:

- Different visions, methodologies and strategies.

- different long-term goals

- Paying too much

- Planned synergies not achieved

- A mix of many factors. The frequent failure to address the cross-cultural fit, as

closely as the legal and financial aspects, contributes immensely.

- different understanding of organizational culture in both sides which is

included CM

- Strategic misfit

Despite the fact that intercultural issues seem to be considered less important than

other factors in beforehand, it seems to play a decisive role for the failure of M&A.

It is not the single reason and our recipients do not agree on one but “Cultural

misunderstandings” rank among the two often chosen options.

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

27,3%

9,1%

0,0%

31,8% 31,8%

Different economic goals

Personal differences

Financial problems

Cultural misunderstandings

Other


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1.2.10. Question 10) How would you rate the influence of

cultural misunderstandings on the failure of M&A?

It has already become clear in the result of the ninth question that culture

misunderstandings have an impact on the failure of M&A. Since it does not

necessary have to be the main reason but might be the final straw, we asked our

respondents to rate the importance of cultural misunderstandings on the failure of

M&A on a scale of 1 (unimportant) to 6 (very important).

No-one chose one and only approximately 15% (4.5% respectively 9.1%) opted for

2 and 3.That already shows that almost 85% must have consider it quite to very

important. The options 4 and 5 received 27.3% each and the influence was

considered very important (6) by almost one third of the people.

Figure 11: Question 10) How would you rate the influence of cultural misunderstandings on the

failure of M&A?

This results in a average rating of 4.67 and one can conclude that cultural

misunderstandings can have a severe influence on M&A transactions. Therefore

intercultural training can contribute to a more successful deal and maybe even

0%

5%

10%

15%

20%

25%

30%

35%

Average score 4,67

0%

4,5%

9,1%

27,3% 27,3%

31,8%

1 (unimportant)

2

3

4

5

6 (very important)


Seite 23

prevent a failure. So far the topic generally has not been sufficiently

acknowledged.

1.3. Conclusion

After the analysis of the ten questions it becomes obvious that the majority of the

experts we asked agree that intercultural aspects have not yet been received

enough attention by most companies conducting an M&A. These transactions are

mainly initiated due to economic reasons and cultural aspects, mainly the cultural

fit is generally considered to be less important than the strategic and financial fit.

Nevertheless, cultural misunderstandings and the lack of intercultural awareness

can influence the progress of the transaction and in the end maybe even

contribute immensely to its failure.

Due to the fact that our number of participants was limited, we do not claim our

results to be universal, however, we received filled-in questionnaires from all over

the world and a clear tendency can be seen. Moreover, there are studies, which

came to similar results and emphasized the importance of culture.

An often cited study by KPMG (1999) found out that 83% of all cross-border M&As

failed to produce any benefit for the shareholders and over 50% actually destroyed

value’’. When looking for possible reasons researchers interviewed around 100

senior executives involved in international M&A and it was revealed that cultural

differences were mentioned as the “single biggest cause for the failure”. 21

Between 2002 and 2004 Lodorfos and Boateng conducted 32 interviews with

senior managers of 16 European large scale M&A deals in the chemical industry

and also found out that culture “plays a key role in the integration process and

21 Brannen, M., Peterson, M. (2009): Merging without alienating: interventions promoting cross-cultural organizational integration and their limitations, Journal of International Business Studies, Vol.40. East Lansing: Academy of International Business, p. 469


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consequently the overall success of the M&A”. Moreover, ignoring the issues can

lead to severe problems.22

For quite a long time culture has been considered as a disturbing factor for M&A,

however, it also offers a lot of potential. Different experiences, methods and

knowledge come together and can, if managed properly, create a decisive

competitive advantage.23

Crucial for the success of the cultural integration is not a high number of

similarities, since even M&A between apparently similar partners fail24 - an often

mentioned example here is the case of Daimler and Chrysler25 - but the

identification of conflict potential and their consideration during the integration

process26. A study conducted by the Deutsche Gesellschaft für Personalführung

(German Association of Personnel Management) on the topic “Personnel

management in M&A project” in 2007 also showed that the economic success of

M&A especially depends on the “existence of an integration strategy, the project

management experience of the project leader as well as the preparation for the

cooperation with the new colleagues of the staff by working timely in mixed teams.

They also highlighted that the indicators and factors of success for national M&A

projects conform in a large part with those for international ones. However,

integrative measures are more likely for international projects.27 Even though we

concentrated our research for the study on international projects, it becomes clear

that the issue must not be ignored for national M&A.

22

Boateng, A. , Lodorfos, G. (2006): The role of culture in the merger and acquisition process, Management Decision, Vol. 44, Emerald Publishing Group Limited, Bingley, p. 1408 - 1411 23

Köppel, P. et al. (2011): Zu viele Fusionen scheitern - M&As trotz unterschiedlicher Unternehmenskulturen zum Erfolg bringen, M&A Review. Munich: GoingPublic Media AG, p. 109 24

Ibid. 25

http://www.midwestacademy.org/Proceedings/2009/papers/Matthes_35.pdf [viewed 2011-09-01] 26

Grosse-Hornke, S, Gurk, S. (2009): Erfolgsfaktor Unternehmenskultur bei Mergers & Acquisitions, FINANZ BETRIEB, Volume 2/2009. Düsseldorf: Fachverlag der Verlagsgruppe Handelsblatt GmbH, p. 100 - 104 27

Geighart, C. et al. (2007): Befragungsergebnisse der DGFP e.V. zum Thema „Personalmanagement in M&A-Projekten“, Praxis Papiere 2/2007. Düsseldorf: Deutsche Gesellschaft für Personalführung e.V., p. 31-32

http://www.midwestacademy.org/Proceedings/2009/papers/Matthes_35.pdf


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Finally, neither should one make the mistake to blame intercultural problems for

every M&A failure and nor should the topic be over- or underestimated. It is

important to find the right balance between strategic, financial and cultural

aspects. The first two can also cause the project to fail. However, more careful

consideration is generally given to them.

intercultural aspects of mergers & acquisitions · intercultural aspects of mergers &...

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