How can successful cultural integration contribute to the overall success of M&A

Abstract

Mergers and acquisitions have been a popular tool for business expansion for decades. Companies join forces with other companies to combat issues like competition, meeting demand, geographical and product expansion and many more. M&A’s are complex, complicated processes, but especially cross-border M&A’s add their own challenges with national regulations and cultural differences. Despite its popularity, majority of M&A’s fail to meet their expected synergies. Researchers and experts have presented many reasons for this, such as rushed decisions, lack of comprehensive due diligence and inability to accurate estimate target company’s value. However, one important factor seems overlooked, the human factor. When companies come together, it’s not only the “hard tasks”, such as product, buildings and systems that merge. It is also the “soft tasks”, such as employees and culture of their companies. Organizational culture is unique for each organization and is built by the founders and employees of that organization. Organizational culture is strongly influenced by national culture. This thesis sets out to explore the connection between the integration of two organizational cultures and its possible role on the success of an M&A. To explore this, the thesis researches various academic sources conducted on the topic before, as well as primary research. A case study of a target company currently undergoing an acquisition is examined, with use of an employment survey.