Are we talking about merger or acquisition? Defining the integration process

Abstract

Purpose

When talking about mergers and acquisitions (M&As), few announcements clearly define if the operation will deal with a merger (where firms have an equal-to-equal relation) or acquisition (when one firm is in control of the operation and decides the integration process). Operations are commonly labeled M&A. Nevertheless, mergers remain rare, and the authors see that most of the time, operations designed and integrated with firms as equals end in the control of one of the entities over the other.

Design/methodology/approach

The authors investigate how two CEOs and their managers communicate during the due diligence period of a merger. The author describes the project merger of two French companies using longitudinal data.

Findings

This in-depth case study provides new insights into the due diligence period and the differences between M&As. The findings highlight how the decision to add an associate from a rival firm to the board ended the merger project as the situation evolved toward an acquisition in CEOs’ minds.

Research limitations/implications

The limitations are those concerning a single case study.

Practical implications

The paper highlights the complexity of merger negotiations and the unexpected events faced by stakeholders. The analysis, thus, contributes to an inclusive and integrative view of the challenges in the due diligence process, whereas first defining the operation as a merger or an acquisition is a first step in identifying the degree to which autonomy and interdependence will be given across firms, and how some strategic decisions will be implemented. This case study highlights two specific items that can be understood by managers as key elements in deal success: defining operations as a merger or an acquisition help internal and external stakeholders in planning the operation; leaving space for adjustment among partners engaged in negotiations during the due diligence period is also useful.

Social implications

Despite their frequency, merger and acquisition failures remain surprisingly high. This paper explores how stakeholders deal with merger negotiations.

Originality/value

The case provides insights into the due diligence period and the way minor events can impact the planned integration. Theoretical concepts and empirical findings from the literature are combined to present a single consistent picture. To the best of the authors’ knowledge, few studies address insights on strategic decisions made as the negotiation period remains a secret and sensitive stage, especially for a failed deal, but we were able to delve beneath the surface.

Citation

Thelisson, A.-S. (2023), "Are we talking about merger or acquisition? Defining the integration process", Journal of Business Strategy, Vol. 44 No. 5, pp. 301-307. https://doi.org/10.1108/JBS-02-2022-0037