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This chapter aims to make sense of the growing research that examines the role of culture in mergers and acquisitions. We provide a detailed review of the many related but distinct constructs that have been introduced to the literature. While each construct has contributed to our understanding of the role of culture, the lack of connections made among constructs has limited the consolidation of contributions. The review shows what these constructs mean for mergers and acquisitions, what major findings have been discovered, and, most importantly, how constructs interrelate. Our discussion provides several opportunities to foster the needed consolidation of this research.

The contribution revisits existing research on human impacts on the performance of mergers and acquisitions. Findings are grouped into three categories: individual-, organizational- and managerial-related factors. Results show that while research seems various and abounding, influential factors are often studied as static setting approached in isolation, without measuring their direct relation to post-acquisition outcomes.

Cultures don’t clash … people do. Hidden below the veil of “incompatible cultures” is a complex network of human-to-human interaction involving information-exchange transactions that have gone awry. The multitude of these troubled exchanges results in what is often branded as “M&A failure, due to culture conflict.”

This chapter presents a theoretical discussion that features practical dynamics of the post-merger integration (PMI) process. The aim is to cultivate a deeper understanding of critical, less-acknowledged micro-level aspects of the post-merger integration stage, specifically, those which underlie the development and maintenance of an organization’s culture and lead to organization performance. It is the unseen information exchange among human actors that leads to the perceptible post-merger outcomes, such as cultural unity and task performance. The quality of these micro-exchanges leads to the value capture from the M&A transaction, thus determining the success – or not – of the combination.

Presented is a synthesis of numerous existing theories, perspectives, and ideas from various scholarly communities, combined with a drill-down to the basic human interactions that define a culture and lead to positive performance. Information flow is the sustenance of an organization, so when merging organizations restructure the information flow is abruptly disrupted, often at pronounced near-term cost. The information-flow channels must be mended for social unification and performance value goals of the combined organization to be realized. The information-transporting social networks of the organizational actors must therefore adapt and intermingle across the old-organizational faultlines. This is accomplished when individual actors alter their personal social networks and retool themselves for a new set of information-exchange interactions.

In closing, the author counsels managers to focus on the dyadic information exchange of their direct-reports as an actionable approach to PMI management. The chapter concludes by pointing researchers toward studying the micro-level aspects of PMI and offers computer modeling and simulation, and laboratory experiments as effective ways to study PMI dynamics at the micro-level of organization behavior. Such methods may also lead to an ability to forecast outcomes of specific post-merger integration scenarios.

Empirical evidence for the positive correlation between company size and competitiveness is widely supported in the literature and research. Of the many ways in which companies can increase in size, mergers and acquisitions (M&As) are the most common. M&As are now a strategic option for corporations to exploit emerging opportunities in order to expand. This paper reviewed the literature on how M&As impact company’s performance, comparing pre-merger and post-merger situations. We found that while scholars have explored this topic extensively, no minimum level of consensus has been reached, not only in conclusions but neither in methodologies nor in identifying independent and dependent variables. The evidence from the M&A literature is extremely inconsistent. Based on these mixed findings, we identified directions for future research, and suggested how to develop the scholarship to reach a consensus on the answer to the research question: does company performance improve after M&As?

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.

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.

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.

The limitations are those concerning a single case study.

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.

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

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.

The purpose of this paper is to analyze mergers and acquisitions (M&A) focusing on the US pharmaceutical industry in the period 1981‐2004. This industry is chosen because it is global, it engages intensively in M&A which it uses to both complement and substitute for early stage research, and because the potential abnormal returns to blockbuster drugs are substantial. It is assumed that if abnormal returns to M&A exist in the short and long run, this is the industry to find them.

The study examines short‐term abnormal returns separating mergers from acquisitions and US‐based from foreign‐based M&A targets. It examined 405 mergers and acquisitions during 1981‐2004 to address the issues of our research.

Evidence of short and long‐term abnormal returns, as well as accounting and efficiency effects are found for acquisitions but not for mergers. However, the tests do suggest that mergers with US‐based targets are not value destroying. It is also found that there are differences as to the effects of acquisitions of foreign‐based, as opposed to US‐based targets.

Taken in total, the results provide support for the view that in the pharmaceutical industry, acquisitions of US‐based companies have a positive impact on wealth creation for company shareholders.

The PMI Risk Framework (PRF) is introduced as a guide to classifying and identifying risks which can be the source of post-merger integration (PMI) failure — commonly referred to as “culture clash.” To provide managers with actionably insight, PRF dissects PMI risk into specific relationship-oriented phenomena, critical to outcomes and which should be addressed during PMI. This framework is a conceptual and theory-grounded integration of numerous perspectives, such as organizational psychology, group dynamics, social networks, transformational change, and nonlinear dynamics. These concepts are unified and can be acted upon by integration managers. Literary resources for further exploration into the underlying aspects of the framework are provided. The PRF places emphasis on critical facets of PMI, particularly those which are relational in nature, pose an exceptionally high degree of risk, and are recurrent sources of PMI failure. The chapter delves into relationship-oriented points of failure that managers face when overseeing PMI by introducing a relationship-based, PMI risk framework. Managers are often not fully cognizant of these risks, thus fail to manage them judiciously. These risks do not naturally abide by common scholarly classifications and cross disciplinary boundaries; they do not go unrecognized by scholars, but until the introduction of PRF the risks have not been assimilated into a unifying framework. This chapter presents a model of PMI risk by differentiating and specifying numerous types of underlying human-relationship-oriented risks, rather than considering PMI cultural conflict as a monolithic construct.

In this chapter, we want to draw merger and acquisition scholars' attention to the variety of settings investigated under the generic label “M&As”. We seek to answer the following question: “What are the study objects that mergers and acquisitions scholars actually investigate and refer to with the generic label ‘M&As’?” We will achieve this aim by conducting a detailed analysis of existing empirical research published in management journals. Through our analysis, we wish to contribute to the existing literature by examining the complexity and ambiguity behind the label “M&As”, and exploring the variety of research settings where management scholars have, thus far, used it to measure merger and acquisition performance. By doing so, we will raise scholars' awareness of the importance of defining the scope conditions where the merger and acquisition performance construct does or does not apply.