|Since the beginning of the 1980, mergers and acquisitions are dominating the world of business and financial press. In fact, almost everyday we have an article of a merger project or an unsuccessful mergers and acquisitions (M&A). During this period, M&A became a worldwide growth industry. In fact, we saw an important growth between 1984 and 1990: according to Cartwright and Cooper (1996:1), the global value of M&A risen from €60 billion in 1984 to €355 billion in 1990. Today, according to a study of the CNUCED: United States conference about trade and development, M&A is worth more than €1 000 billions. Moreover, M&A became more and more international: thirty-seven percents in 1990 according to Cartwright and Cooper (1996: 1).
According to Pritchet (1985:1): “mergers and acquisitions serve as one form of corporate growth”. This strategy can give to companies good opportunities for their future: improve performance, explore new markets, diversify products, acquire new technologies, reinforce competitive position, etc.
But this growth was stop in 2002: we saw a drop of 28% for the M&A: in 2002 the global M&A was worth $1206 billion in comparison to the $1675 billion in 2001 (Lethielleux, 2004: 2618). This decrease can be explained by a lot of complex reasons but we can see that human factors are one of the most important with the organizational culture. According to Pritchet (1985: 1), in most of cases, “the dissonance, the psychological shockwaves, appears to be unexpected, poorly understood and inadequately governed”. These facts can lead to the decrease of mergers and acquisitions benefits for a company.
Reuter’s glossary of international and financial Terms gives good definition in order to differentiate mergers and acquisition. It describes a merger as the fusion of two companies or, sometimes, an acquisition or a takeover of one company by another. An acquisition occurs only when an investor holds more than 50 per cent of outstanding voting securities.
“Today, mergers and acquisitions (M&A) are a big part of the corporate worldwide. Every day, Wall Street investment bankers arrange M&A transactions, which bring separate companies together to form larger ones. When they are not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spin-offs: the creation of an independent company through the sale or distribution of new shares of an existing business / division of a parent company”, carve-outs or tacking stocks.
However economic conditions is not good, M&A operations are still a boost to create economic benefits. In France some good operations were done recently: the rapprochement between banks Credit Agricole and Credit Lyonnais, acquisition of Wella by Procter & Gamble (hygienic products), etc. Because of the instable Economy, the risk associate to merge and acquire is very high in comparison with previous years. Moreover shareholders and bank demands, employees and customers’ expectancy lead to increase the pressure on the company managers during a M&A. Researches showed that only one M&A under two brings value for companies. Even today, reasons of these failures are very complex so this study will focus in the organizational culture.
Today, the accomplishment of a M&A relies as much as the preparation post M&A than the integration process after the signature of the companies. But the most important point is the quality of the implementation process. Now, we have enough detachment to analyze big operations in M&A and we can try to analyze success and failure of these operations.
In this field study we want to explore the world of the merger and acquisition. Inside of this subject there is many and many problems to solve. We can ask many questions about how a merger can work. We will explore the complex world of the M&A and try to understand why more than 50% of these strategies do not achieve their aim. According to Bengtsson (1992:3): “some acquisitions are prematurely declared successful but, after a few years, they are still so fundamentally unsound that the company disintegrates”. M&A can fail almost immediately if there are integration problems or if the post-merger analysis is not done correctly.
This report will consist of four parts: first of all, it is necessary to define the problem the research is required to solve and its objectives. Then, the report will present a theoretical literature review and empirical findings, in order to give some recommendations to reach research goals.