The Global M&A Tango: How to Reconcile Cultural Differences in Mergers, Acquisitions, and Strategic Partnerships

Citation

Durand, M. (2012), "The Global M&A Tango: How to Reconcile Cultural Differences in Mergers, Acquisitions, and Strategic Partnerships", Cross Cultural Management: An International Journal, Vol. 19 No. 2, pp. 271-273. https://doi.org/10.1108/13527601211219946

In The Global M&A Tango, Fons Trompenaars and Maarten Nijhoff Asser present a framework for reconciling the dilemmas which arise in the context of mergers, acquisitions, and alliances. The authors propose a structured approach to creating harmonized cultures in order to make mergers successful. They postulate that by integrating the best of both organizations, M&A can lead to even greater performance. It is a deeply integrative process that requires the cooperation of both parties. As the authors note in the preface, “Mergers and acquisitions need to be in the business of marriage, not simply weddings” (p. ix).

Since combining values orientations and overcoming common obstacles to integration is not easily accomplished, a systematic and methodological framework is required. The declared purpose of the book is to present to practitioners a generalizable, reliable, systemic and consistent ten step process aimed at creating sustainable and integrated value from the distinct organizational, team, and leader cultures.

The first part of the book sets the context by providing the rationale for developing a practical framework. It is well known that the majority of mergers and acquisitions do not reach their expected objectives. The challenges and key issues facing successful M&A have been well identified (project planning integration, due diligence, selecting the management team, resolving cultural issues, etc.), but they need a practical framework to be implemented successfully. The authors argue that the main reasons for merger failures are cultural differences. The process for overcoming obstacles is the same for any company, they claim, but the dilemmas and challenges are unique for each case. The assumption underlining their method is to create new values for the two merged organizations (NEWCO). Values are seen as an aid to reconcile key dilemmas through a created shared reality rather than focusing on differences. Considering leaders as the implementers of the integrative change, the authors focus on the leadership team as the target of their model. They make many interesting observations, though unfortunately their statements remain undocumented.

The second part of the book focuses on the presentation of the authors' approach: it is divided in three stages:

1. 1.

   creating a compelling business case;

2. 2.

   developing an implementation strategy; and

3. 3.

   realizing and rooting the benefits.

The authors provide extremely helpful examples and cases to illustrate the applications of their method (Geodis, Cisco, IBM&PWCC, UniCredit), which the practitioners might find useful should they have any expectations concerning practical experiences.

Part 3 of the book looks at dilemmas associated with relationship management. This last chapter gives the reader further assistance in the application of the ten steps framework through an analysis of “ten golden dilemmas” (frequently recurring dilemmas identified) and explores the issue of trust.

The authors offer some tips for the practitioner to facilitate a diagnosis, such as using a cascading approach (starting with the top management team, working in small sub‐groups); repeated questioning to elicit the very core or fundamental of the purpose of the organization. This diagnosis highlights the value dilemma that the group is facing during the integration process. It is based on the previous four quadrant model of corporate culture (Incubator, Guided Missile, Family, Eiffel Tower) developed by Trompenaars in “Riding the waves of culture” (1997). One of the tools that the author's employ to explore the core values is the use of metaphors to stimulate the participants to detach from their current reality.

In addition to such tools as assessing the goals, the business challenges, the purpose and values, according to the Big Hairy Audacious Goal (BHAG based on the of Collins and Porras (1994)), authors suggest to employ semi structured questionnaires and Organization Value Profiler (OVP), an assessment tool, which they developed. This last tool aims to “identify the similarities and differences of the organizational cultures involved and the values of the existing organizations that will challenge and influence the merger or acquisition” (p. 59). The respondents (executives and managers) are asked to give two sets of ratings for their own organization in order to explore “current” and “ideal” organization. In addition to the OVP, personal values of key players are assessed using their Personal Value Profiler (PVP). Using the results from the two previous assessments, they compare OVP and PVP (which should ideally match). The core values can be defined where the PVP validates the OVP. It is advised to identify and maintain four core values, which can be translated into desired behaviors through activities, such as running a workshop or producing a charter that stipulates the desirable and undesirable behaviors for every core value elected. These are measured and reinforced through key performance indicators (KPIs). The recommended approach used to survey key drivers is based on the methods proposed by Marshall Goldsmith (2009) (“asking people what they want to stop, start, continue in their behavior”, p. 118). The authors also recommend the use of key reconciling indicators (KRIs) rather than KPIs. The use of KRIs is recommended to overcome the loss of information due to balanced scorecards (used in KPIs).

In summary, the dilemma framework benefits from having a very comprehensive systemic and structured process to overcome the common barriers to successful integration. In this way the authors have reached their stated goals. Their ten steps approach aims to reconcile differences and to realize and sustain the business benefits of M&A. The philosophy underlying the authors' methods is about taking advantage of differences to maximize performance using reconciliation.

However, a number of critical observations can be made regarding:

• •

  the lack of academic references of the authors' statements;

• •

  the lack of statistical validation to support the tools proposed by the authors;

• •

  referring only to authors' own work or to consulting firms and consultants; and

• •

  the huge complexity and burden of the model.

The authors would argue that “today's business world is complex, and simplistic approaches to integration do not work, which is why too many mergers fail to realize the expected benefits” (IMQ, 2010). Nevertheless, it is legitimate to ask if we can concretely start the first step of this model and be able to go through the ten steps, having teams still committed and willing to endure five to seven questionnaires or assessment tools.

To conclude, the reader might be disappointed if they were expecting to find a “ready‐to‐use recipe”, as stated in the beginning of the book. In my opinion, the authors do not fulfill their goal, even if we are all aware that there is no magic formula. Trompenaars and Asser aspired to develop a comprehensive methodology complete with a tangible “how to” tools. Practitioners were named as the intended readers of the book. I am the intended reader since I do consulting, teaching and research in the M&A field. However, apart from case studies and business examples I cannot find any documented effects of the model that I could use to convince my clients in investing in the process. The authors failed to present a case for the development or operationalization of the tools or provide statistical data to illustrate the relevance or the feasibility of the method in practice. I am afraid, as far as business practitioners are concerned, the usefulness of the model will be limited. The number of tools developed can be very confusing and it is easy to lose focus of the end objectives. The very burdensome processes that the leadership team has to go through, including four to five instruments (taking some of them twice), raises the question of feasibility in a day to day business context (Current and ideal measures for PVP, mapping PVP and OVP, KPIs). Is it affordable in an M&A integration and post integration context? Is it justified? Do we have any data about the return on investment?