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Meet the joint editor of... Advances in Mergers and Acquisitions


An interview with: Professor Cary Cooper
Interview by: Margaret Adolphus

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Photo: Professor Cary Cooper. Professor Cary Cooper CBE is professor of organizational psychology and health, and pro-vice-chancellor at Lancaster University. He is also a director and founder of Robertson Cooper Ltd. Professor Cooper is recognized as a world-leading expert on stress and is the media's first choice for comment on workplace issues. He is a fellow of the British Psychological Society, The Royal Society of Arts, The Royal Society of Medicine, The Royal Society of Health and an honorary fellow of the Royal College of Physicians.

He is also the president of the British Association for Counselling and Psychotherapy, the editor-in-chief of the Blackwell Encyclopedia of Management and the author/editor of over 100 books.

Professor Cooper also recently received the Lifetime Practitioner Award from the British Psychology Society in recognition of his services to the profession. He was awarded the Commander of the Order of the British Empire (CBE) in 2001.

About the book series

Mergers and acquisitions are a primary vehicle of growth for companies around the world, and as such are the subject of intense scrutiny both in the business world and in academic research. Advances in Mergers & Acquisitions was born out of a desire to bring together two different strands of research on the subject, finance and management, and to try and throw light on why so many mergers have unsatisfactory results. The series invites contributions from a range of disciplines spanning management, accounting, finance and economics. It welcomes both theoretical and empirical approaches.

What is the mission, and editorial remit, of Advances in Mergers and Acquisitions?

Before answering that question, we need to look more generally at why mergers and acquisitions are an important part of the economy.

In good times, you get acquisitions: a lot of companies acquire other companies because they want to go beyond organic growth, which they can do best by acquiring more companies. But when there's a downturn we have an increase in mergers, because individual organizations are less likely to be able to survive by themselves. You can get acquisitions as well, because very weak companies are bought by stronger ones.

So either way mergers or acquisitions have been part of the business scene for quite a long time now, to an increasing extent. There are probably more mergers than acquisitions at the moment. But then we'll probably shift into more acquisitions than mergers as we come out of the recession.

The point being that organizations need expert advice, they need first-rate research which tells them about the various issues that make a merger or an acquisition work. Which is exactly what the series does.

So, what are the issues you need to be aware of in looking for a successful integration between companies?

In a sense, a merger is like a marriage, it's about finding the right partner. There are various issues which both parties need to be aware of. Number one: who is the right commercial partner for us, in terms of what we both bring to the marriage? Then, there's the financial issue: we may have the right product or service mix, but what financial benefits can this bring?

You also need to consider organizational psychology. We know the product and service mix is right and that it makes financial sense, but are the cultures compatible? If the management styles and value systems are compatible, then everything will be all right.

You may gain a good product mix, you may save money, so you will gain economic and financial benefits, but if the cultures are incompatible, then merging might not be a good idea. The primary reason for failure is not finance or economics, but the fact that nobody before the merger actually looks at the respective value systems and cultures to see if they are compatible.

Even if you're acquiring a business that's cheap because it's got problems, you should still look beyond the business assets: what about the human assets? You are also acquiring a management style and a culture. Cultures are very strong even in weak companies and you might not be able to change the people. It might be better just to continue to grow your own company rather than to acquire a set of value systems and processes that are so different from your own.

So as you can see, in this series we look at mergers and acquisitions from a range of disciplinary perspectives: economics, finance, accounting, organizational behaviour, occupational psychology, corporate strategy, etc.

Going back to the marriage metaphor, I'm questioning whether this is always appropriate. Marriage implies a process of consideration and mutual respect, but in an acquisition of a failing company that's bought, it can be more like a Victorian orphan going to live with a relative ...

I think you're absolutely right, what you're saying is that there's a difference between the merging of relative equals, and the acquisition of a company that is not so healthy. On the other hand, the reason why I use the marriage metaphor is because if you treat the new company like an orphan, it's not going to work. Remember that the research evidence shows that two out of every three mergers fail. Two plus two does not equal five; two plus two at best equals four and probably in most cases equals three.

So the reason we developed this series is because of the high failure rate of mergers. Not that the businesses fail, but that the merger doesn't live up to the expectations: that's what the research shows.

Actually acquiring other businesses for growth seems a good strategy because you don't have to grow organically and invest internally. But merging and acquisition is much more problematic than organic growth. We may look at the bottom line and see how much we can save, and we can see the added value of selling that building society on the same high street and keeping our cost base down, but if the cultures are wrong, it doesn't work.

So, part of the process involves looking at the differences. I agree with you, the merger of relative equals (to find exact equals is rare) is different from acquiring a business that's in deep trouble. There are different dynamics. On the other hand, if you treat the acquired company respectfully, the merger or acquisition is more likely to be successful.

So the series is looking at the economics of mergers and acquisitions; at the cultural issues; and how do we deal with different cultures if we know they are different, but we still believe merging makes good business sense?

How can companies deal with the stress the workforce suffers during a merger or acquisition process?

That's another thing the series does; it has articles from leading people saying how you can manage people's fears and uncertainty about roles and so on.

I helped one company, who shall remain nameless; it was an international merger, they were relative equals, one in one country, one in another. The human resource (HR) directors and the chief medical officers said how frightened everybody was with all the uncertainty. So they opened up an online service where everybody's anonymity was guaranteed. So, you could ask questions like, "I'm in research and development (R&D), and I'm worried to death that you're going to move it to France".

And they had senior people providing honest answers, for example, "I'm afraid R&D will go to France, but anyone who wants to go there can". So, they were being honest rather than letting everybody wonder and speculate, and they did it right up front, as the merger was being dealt with. That was a smart way of dealing with the problem; there were bound to be disappointed people, but at least it got rid of the uncertainty.

And that particular merger worked extremely well, it's been one of the success stories.

The whole object of the series is to highlight the research on what tends to work. What is a good communication strategy? What makes for compatibility and, post merger, how do you deal with the big issues? For example, we've had articles which review the research on post-merger issues, such as: what are the best communication strategies? Other articles look at areas where we don't have enough research to determine best practice, for example, how do you deal with HR procedures in international mergers?

Another whole issue concerns public sector mergers, for example, between universities or government departments. These have been the exception rather than the rule, but they are now becoming more common. Then there is the international dimension: more and more mergers are taking place across borders.

How did you come to be joint series editor, and what is your role?

One of my PhD students (Susan Cartwright, formerly at Manchester Business School, now at Lancaster where she is director of the Centre for Organisational Health and Wellbeing) did her PhD on the merger of two different building societies. We collaborated on a book on mergers and acquisitions, but from an HR perspective, looking at the cultures and how you should manage people post merger.

So, Alan Gregory of Exeter University, who is an expert on finance, called me up because he had been approached by Elsevier [the previous publisher] to do the series. He felt that we needed to cover the whole field, and look at mergers from almost all the different angles.

Alan Gregory edited the first two volumes, then for the third volume Sydney Finkelstein of Tuck School of Business, Dartmouth College, came on board and we've worked together ever since.

What is unique about the series?

The series creates a place where you can find review articles on particular aspects of mergers and acquisitions, all together in one volume. Before Advances in Mergers and Acquisitions started, you could find articles in different journals, but because the journals represented different disciplines –- economics, finance, HR, organizational psychology – so too did the articles.

Advances in Mergers and Acquisitions reviews topics from many different disciplinary perspectives. Chapters are usually 20-25 pages, and we have seven or eight per volume.

Because the series is annual, our readers get to see the latest research. And sometimes, we may go back to a particular issue after five years if a lot of new research has emerged.

What can a book series offer the topic, that a journal can't?

Our articles are not like journal articles: they review all the evidence on a topic, not just their own, but everybody else's as well. We don't, for example, publish case studies or pieces of empirical research, although we did on one occasion simply because it was very big and very novel.

Generally speaking, we take a topic, for example a post-merger or acquisition communication strategy, review all the evidence, and draw conclusions as to what is the best communication strategy.

How do you go about structuring a particular volume? Many book series are theme based, but you don't seem to follow this approach.

There is no theme in any one issue. We could theme it, but it's best to see what is the latest research. It's also difficult to pick one theme because there are so many different disciplines involved: the subject is by its nature multidisciplinary.

Sydney Finkelstein and I go to the Academy of Management Conference, listen to all the papers on mergers and acquisitions, pick out two or three people and asked them to do a review of the best research for that particular issue. We also go through the literature.

But now the series is getting so well known, although we are still being proactive, chapter proposals are coming in to us as the series is seen to be the place to publish.

How does your review process differ from that of a journal?

First, we don't have an editorial board, so usually it's down to the editors to review the article. Second, we are inviting people who are good scholars and experienced writers and researchers, so this is not their first publication. (Although I'm not against commissioning new scholars: if I hear someone at a conference doing really good stuff for their PhD, I will invite them to send in a contribution.) Third, we are asking for research reviews, not for their own scientific work. A journal article would publish original research, for example someone would collect data on two building societies and then write it up. But our writers review what everybody else has done, so the review process is less intimidating because you are commenting not so much on the research, but the way it is written up. We call it "developmental feedback" – how the author can improve the draft.

You're saying that you're doing all this to improve mergers and acquisitions, do you influence people outside academe?

Our first market is the academic community: academics and PhD students who work in the field.

We also aim the series at practitioners: HR directors, chief financial officers (CFOs), and those companies which have a head of strategy who looks at strategic issues about where the company is going. Anybody in an organization who is responsible for mergers and acquisitions – and it's different in different organizations, so it could be a CFO looking at the financial issues, it could be an HR director looking at the people issues, or it could be a strategist looking strategically at whether this is a good idea or not, and anybody interested in international business – should consult the series. It doesn't just provide one-off studies: it reviews the evidence of what works and what doesn't.

Publisher's note:

Professor Cary Cooper was interviewed in September 2009.

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