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International Mergers and Acquisitions Special Issue.

Mergers and acquisitions are an increasingly critical part of the business landscape. Because of deregulation, market liberalization, technological change, and globalization, the number and value of deals transacted worldwide continued to rise during the 1990s and are continuing to do so well into 2001. Much of this activity is being driven by the rise in cross-border deals, especially within Europe. Despite the level of M&A activity, the cumulative research suggests, that on aver age, these forms of corporate growth do not increase the shareholder value of acquiring companies. Many reasons linked to different stages of the acquisition process have been offered for why M&As and particularly cross-border M&As, fail, including excessive purchase price, exaggerated synergies, poor due diligence, and failed integration.

In this special issue of the Journal of World Business we present five articles that provide insights on various aspects of the M&A process. The first article by Victoria Emerson is an interview with Carlos Ghosn, the Renault executive who, in July 1999 became President and COO of Nissan Motors, a company with huge strategic and financial problems. The interview focuses on the organizational challenges he faced and the decisions he made after Renault took a 36.8% stake in Nissan. Mr. Ghosn has been widely written about in the worldwide business press for his efforts at Nissan and his willingness to challenge the existing business norms in Japan. In a little over a year since taking the position, Mr. Ghosn returned Nissan to profitability and gained the admiration of the global business community. His insights on leadership during an acquisition should be of great value to the readers of this issue.

The second article by Very and Schweiger presents the results of a study that examined all phases of the M&A process. The authors, with the help of Arthur Andersen, France, studied 26 middle market companies. They attempted to identify critical problems faced and solutions employed by acquirers during the stages of the acquisition process for domestic and cross-border deals. Results were then examined from a learning perspective, which itself revealed that the acquisition process can be understood both as a learning process applied to the focal deal and as a learning process aimed at improving the overall acquisition process itself. Moreover, results indicate that both forms of learning are affected by an acquirer's experience in a particular target country for cross-border deals.

The third article by Angwin focuses on one aspect of the M&A process, due diligence. The author conducted an extensive study of how executives from 142 companies carried out M&A due diligence. Countries included in the study were the United Kingdom, Germany, Sweden, France, Switzerland, and the Netherlands. The study provides important insights into the role that due diligence plays and its value during the M&A process. Of particular interest is that the author found some differences across countries. The results of this study should be helpful to those transacting cross-border deals. It clearly indicates the importance of national differences in understanding how other firms may approach a deal and how to effectively interact with them during the M&A process.

The fourth article by Risberg is a case study of two acquisitions by a Finnish company. The first was of a Norwegian company and the second a Scottish company. The study is quite interesting in that it focuses on the acquisition experiences and interpretations of the acquired companies' members. The study is retrospective in that informants were asked through interviews to reflect on and talk about the postacquisition process. The study provides an understanding of the acquisitions process from many different levels of the organization than is usually reported in the literature. The author depicts how and when different types of ambiguities arise throughout the acquisition process, and proposes ways to handle them.

The final article by Krug and Nigh focuses on an area where there is limited M&A research, executive turnover. In a survey of 284 executives in 142 domestic and cross border acquisitions, the authors examined differences in perceptions between executives who stayed and those who left after an acquisition. Of importance is that perceptions differed with respect to cultural differences, system changes in the acquired company, acquisition negotiations, executives' reasons for staying or leaving after the acquisition, and post acquisition outcomes for the organization based on whether the executive was acquired by a foreign or domestic acquirer.

To build this issue, we deliberately chose to collect contributions from researchers and practitioners and from countries with important international M&A activity: Japan, Sweden, France, Great Britain and the United States. We believe that by presenting different research approaches, different management practices and different views of the world, we could create "reader value." We hope that the articles provide a number of practical insights and stimulate additional empirical research.
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Article Details
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Author:Schweiger, David M.; Very, Philippe
Publication:Journal of World Business
Date:Mar 22, 2001
Previous Article:Making Their Own Way: International Experience Through Self-Initiated Foreign Assignments.
Next Article:An Interview with Carlos Ghosn, President of Nissan Motors, Ltd. and Industry Leader of the Year (Automotive News, 2000).

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