Culture, Change/Integration in Mergers and Acquisitions - Research Paper Example

The subject of culture and integration in merger and acquisition companies is usually thought of as a secondary task in the process. In fact, its importance and significance are just as significant as the analysis and synergies that are a part of the profit and market growth considerations that put the prospective company on the M&A radar (Gaughan, 1999, P.). The size of multinational corporations (MNC) was brought forth in a report titled ‘Growth in Multinational Corporations and the Impact on Culture’ that examined a number of theories on MNCs that included their impact globally as a result of there growth, along with different facets as represented by culture.

In general, when one thinks of merger and acquisition activity the general definitions skew the thinking in terms of revenues, profits, market expansion, investment, and shareholder value. Research conducted on the definition of M&As supported this general worldview as evidenced by a number of sources. The Financial Times (2009) defines the term “… the acquisition may or may not lead to a merger, from an investment banking point of view the two concepts require the same expertise.

M&A activity can result in consolidation or rationalization in a particular sector or industry.” Another definition states that an M&A (FreeDictionary, 2010): “…is a combination of two companies where one corporation is completely absorbed by another corporation. The less important company loses its identity and becomes part of the more important corporation, which retains its identity. A merger extinguishes the merged corporation, and the surviving corporation assumes all the rights, privileges, and liabilities of the merged corporation”.

The two preceding definitions definitively support the contention raised in terms of the view of merger and acquisition activity that uses a third definition to indicate the conceptual focus of areas. This added definition states that M&As are an “Area of banking or financing that deals with funding of acquisitions, mergers, and takeovers. It is usually an area of specialty of corporate lawyers, merchant banks, and stock brokerage firms” (BusinessDictionary.com, 2010). In adding to the foregoing investigation of M&As, Drew (2007) explained that mergers and acquisitions increase shareholder value.

The point of this seemingly drawn-out emphasis is that the financial, growth, expanded market, and revenue side of the merger and acquisition ledger predominates when one looks at definitions. Straub (2007) stated that the benefits of mergers and acquisitions include the creation of economies of scale as a result of the increased size resulting from the activity, along with the enhancement of market power. In looking into the performance of merger and acquisition activity, the results these combinations have achieved does not bespeak a stellar track record.

KPMG conducted a study on this very point and found “83% of all mergers and acquisitions (M&A’s) failed to produce any benefit for the shareholders and over half actually destroyed value” (Giletson et al, 2001).