specific merger. Most companies use the term ‘integration’ to describe the
post-merger activities designed to bind the acquiring and acquired companies,
just as the vast majority of so-called mergers are in fact acquisitions. But what
happens is actually assimilation, a process that is fundamentally different from
true integration.
The logic of assimilation is simple: make the acquired company just like
the purchaser. However, companies are sensitive to public perceptions of being
a foreign bully, and they are often hesitant to proclaim their objective of assim-
ilating the acquired firm, fearing that it may compromise the deal. This often
creates confusion and mistrust that will make the assimilation process more
difficult. In contrast, GE Capital, the financial services arm of General Electric,
offers blunt advice to the management of firms that were acquired around the
world: ‘If you do not want to change, don’t put yourself for sale.’ GE makes it
very clear to the acquired company that it now has to play by GE’s rules, and
it provides a framework in which to do so.
In the case of true integration, the emphasis is on capturing hidden syner-
gies by swapping and leveraging capabilities. At times, the companies may
decide to establish a new identity as with Novartis, which was formed through
the merger of Ciba-Geigy and Sandoz in 1996 to create a global life sciences
giant. Both approaches to M&A implementation have their merits. The choice
of either assimilation or integration depends on the strategic intent behind the
acquisition and the desired cultural characteristics in the new organization.
Choosing an approach that does not match with the strategy or the desired cul-
tural outcome can significantly reduce the value created by the acquisition.
A useful way of formulating the acquisition logic, as shown in Figure 4.1,
is to focus on the cultural ‘end-state’ and the path to reach this (Marks and
Mirvis, 1998). What kind of culture is desired for the new entity, and how
much change will be required within both acquiring and acquired companies
in order to get there?
When no cultural change in the acquired company is desired, then it can
be considered as a stand-alone acquisition. When a large amount of change in
the acquired company is expected but with relatively little change for the
acquirer, then absorptionis the most likely path. An expectation of major cul-
tural change in both entities results in a cultural transformation, while the selec-
tive combination of the most appealing features of the two cultures is often
described as a ‘best-of-both’ acquisition. In rare cases, the culture of the acquirer
is blended into that of the acquired firm in a reverse merger.
Stand-alone acquisitionsWhen a deal is announced, it often contains a reference saying that the
acquired company will preserve its independence and cultural autonomy. This
often occurs when one of the rationales behind the merger is to get hold of
HRM in Cross-Border Mergers and Acquisitions 93