International Research Journal of Finance and Economics ISSN 1450-2887 Issue 15 (2008) EuroJournals Publishing, Inc. 2008 http://www.eurojournals.com/finance.

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International Acquisitions: Strategic Considerations

H. Donald Hopkins Temple University, Fox School of Business and Management Philadelphia, PA 19122 E-mail: [email protected] Tel: 215.204.8146; Fax: 215.204.8029 Abstract More and more companies, large and small, are entering into combinations that span international borders. Some are instituting joint ventures, others are forming partnerships, and still others merging or making outright acquisitions. Cross-border M&A is a large and growing part of all FDI. In an age of globalization, cross-border M&A represents one of the most important means of integrating the worlds economies. Most research on M&A, however, indicates that firm performance is not positively affected. The purpose of this article is to consider this activity from a strategic perspective. A very small part of the research on M&A is devoted to finding specific strategies that perform better than others. This article is interested in determining if there certain international acquisition strategies that are likely to succeed.

Introduction
Where once there was one now there are two. DaimlerChrysler is no more. It seemed like a good idea at the time. It may have, in fact, been a good idea. Recent research would say that this merger was a good idea (Kang, 1993; Morck & Yeung, 1992). The failure could most likely be blamed on poor postmerger leadership, flawed integration, and changed industry conditions. Whats more, it could have been saved if it had followed the script written by the Pharmacia-Upjohn merger (Belcher & Nail, 2000) where after initial difficulty a skilled turnaround artist from the outside was brought in to save the day. This was a leader who had no loyalty to Pharmacia nor Upjohn. The new cross-border merger wave (2003-2006) seems to have created more value than the previous one (1991-2000). Much has been written about mega-deals like DaimlerChrysler. Crossborder deals make for dramatic stories that many find thrilling to read about. These deals appeal to managers desire to build something bigger and leave an international legacy. Many of them, unfortunately, do not work out. A few, however, do work. Some companies, like GE Capital, have an excellent track record with international acquisitions (Ni & Wang, 1999; Xu, Wang &Jin, 2000; Jiao & Yang, 2002). Those that do work lead others to continue to pursue cross-border deals and provide for their justification. Each one seems to rest on a story and a rationale that cannot be briefly told. For every case of successful cost reduction or R&D synergy there are many other cases of outright failure, foolishness, and negative synergy. While some companies become so practiced that they establish ongoing "integration teams," others seem to be start from ground zero with each deal. According to the UN World Investment Report of 2007,The continuing strong M&A activity can also be partly explained by the fact that the current M&A boom has produced more corporate value for the acquiring companies than the previous one; the value of the companies created by M&A in the

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previous boom shrunk continuously as these activities progressed. Could this be some kind of learning effect? Of course, it might be too soon to pass judgment on the current boom. There has been quite a lot of research on M&A activity over the years. Research on crossborder mergers and acquisitions has also become more popular. In a recent review, Shimizu, Hitt, Vaidyanath, and Pisano (2004) review 31 studies on cross-border mergers and acquisitions. They categorize these studies into three streams: cross-border M&A as a mode of entry (e.g., comparing CB M&A to greenfield entry); CB M&A as a dynamic learning process; and finally, CB M&A as a value creating strategy (examining post-M&A performance with longer term measures). However, none of these streams address the focus of this paper. With all the different approaches to CB M&A are there certain long-term strategies that are better than others? For example, might it be that an acquiring firm that intends to use its acquisitions as a foundation for future growth and consistently acquirers hightech firms in the same industry with complementary but not identical skills, that have compatible organizational and national cultures, and intensively markets itself to the international business press and investment community is more likely to succeed than are other strategies? In fact, some research studies suggests that with the right strategy and the right approach to post-merger integration, cross-border acquisitions can create value for the acquiring firm (Belcher & Nail, 2000; Benou, Gleason, and Madura, 2007; Colombo, Conca, & Gnan, 2007; Seth, Song, and Pettit, 2002; 2000). Thus, even though research suggests that most acquisitions fail, it may make sense in some cases. Some researchers have accused the senior managers of acquiring firms of thinking they can succeed where most others have failed and thus demonstrating what is called management hubris (e.g., Seth, Song, & Pettit, 2000). Accusations of hubris on the part of senior managers is especially damning given that research to date on M&A activity so clearly demonstrates that most mergers, both domestic and cross-border, do fail and this observation has been widely reported in the business press. Pointing to management hubris, however, may be unfair since in many other areas of human activity many strive to succeed at things where the odds are long. These include starting a new business, submitting an academic paper to a highly selective journal, and running for president, among others. In these types of activities we dont claim that those attempting to succeed in these activities are being foolish. Researchers sometimes wonder why managers continue these losing courses of action when research shows most fail (Brouthers, van Hastenburg, & van den Ven. 1998). The answer may be that managers quite reasonably think that they can succeed where others have failed because some do, in fact, succeed. Whether their efforts are given a negative label quite possibly depends if it is being judged by an outsider (i.e., an academic) or an insider (i.e., a manager). The current cross-border merger wave had its start in 2003 and was still moving up in 2006. The current wave has yet to surpass the previous one in terms of the number of $1 billion deals. The value of deals over $1 billion grew from $32.7 billion in 2003 to $96.0 billion in 2006. In light of the growing importance of cross-border mergers and acquisitions for corporate growth, this article intends to focus on what managers are able to control, the choice of cross-border merger strategy and the way that strategy is implemented. A second purpose is to update earlier and more general reviews of cross-border M&A research (Shimizu et al, 2004; Hopkins 2002).

International M&A Trends and Regional Patterns

The current merger wave (i.e., 2001-2006) is different from the wave that preceded it. The first international merger and acquisition wave during 1994-2000 was largely in the information and communication technology industries. The current wave, however, is in consumer goods, services, financial services, energy and basic materials. Some transactions make a lot of sense. They are strategic in nature. They are done for strategic reasons including growing market share and quickly reaching new markets. In a number of other cases, the deal fever catches on. Some CEO's may do deals because they want to be bigger than their competitor.

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Many of the mega-deals involve cross-border acquisitions that allow firms to gain immediate access to one or many foreign markets, access that would take many years to develop from greenfield subsidiaries. These deals can be used to broaden a product line, move into a new market, and create or strengthen capabilities more quickly than it would take through internal means. The most recent wave is taking place in all regions of the world. The value of North American cross-border M&A grew by 100% in 2006 to $242 billion from $132 billion (sales). In Europe the value of deals more than doubled from 2004 to 2006. The value of deals in Europe was $451 billion, making it the area of the greatest activity by far. The single country with the greatest amount of activity, however, was the U.S. Second was the United Kingdom, and then come Germany and France (UN World Investment Report, 2007).

Strategic Logic Driving M&As

One important aspect of understanding cross-border M&A is to examine the logic driving the deals. Strategic motives involve acquisitions that improve the strength of a firm's strategy. Examples would include mergers intended to create synergy, capitalize on a firm's core competence, increase market power, provide the firm with complimentary resources/products/strengths, create economies of scale, open new markets, or gain access to deeply embedded resources. Britains FirstGroup, the dominant firm in public transportation in the UK, acquired the American firm Ryder Transportation. The fact that FirstGroup made a cross-border acquisition that stayed within the same business sector while allowing it to enter a major new market would definitely qualify it as strategic. What makes it strategic is that by staying in the same business sector FirstGroup strengthened its core competence in transportation. Merging in order to create synergy is probably the most often cited justification for an acquirer to pay a premium for a target firm. Synergy can be created by redeploying assets. This can mean one of two things. In the first case, the acquiring firm may transfer a resource belonging to the target firm to the acquiring firm. Colombo, Conca, and Gnan (2007) found that a strong predictor of acquisition performance was the extent of asset redeployment from the target to the bidder. In the second case, assets may be redeployed from the bidder to the target. For example, when Renault acquired Nissan the leadership skills of CEO Ghosan were redeployed to the benefit of the target. Firms such as Ford and GM were unsuccessful in luring Ghosan away from Renault. The greater the extent to which important resources are embedded in one firms operating procedures, routines, or culture, the more likely that a merger with a carefully managed post-merger integration process will be required to gain use of these resources. In a recent study, Seth, Song, and Pettit (2002) subdivided a sample of firms where a crossborder acquisition of a U.S. firm was made according to the acquiring firms motive. The possible motives were synergy, managerialism (acquiring for the personal benefit of managers), and hubris (overconfidence). They found, interestingly enough, that only the acquirers motivated by synergy created positive valuation gains for the acquiring firm. However, in a book by Mark Sirower, The Synergy Trap: How Companies Lose the Acquisition Game, the author argues that synergy rarely justifies the premium paid. Sirower declares, "Many acquisition premiums require performance improvements that are virtually impossible to realize even for the best managers in the best of industry conditions". He further argues that the net present value of an acquisition can be modeled as: NPV = Synergy Premium And that firms that don't realize this and don't realize that synergy almost never justifies the premium paid are falling victim to the "synergy trap." He cites as a typical example the acquisition of WordPerfect for $1.4 billion by Novell. "Did they ask what Novell, the parent, could do to make it more competitive against the office suite products of Microsoft or Lotus? If they asked, their answers apparently left something out. Novell lost $550 million of market value on announcement of the acquisition. Since then, Microsoft has continued to gain market share and Novell recently sold

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WordPefect, less than two years later, to Corel for less than $200 million -- a loss of over $1.2 billion" (p. 10). For the past two decades, the premiums paid for acquisitions--measured as the additional price paid for an acquired company over its pre-acquisition value--have averaged between 40 and 50 percent, with many surpassing 100 percent. Sirower concludes that the higher the premium is, the greater is the value destruction from the acquisition strategy. In exploiting a core competence, a firm takes an intangible skill, expertise, or knowledge and leverages it by expanding its use to additional industries where it may create a competitive advantage. Thus a company such as Honda may develop a core competence in engineering internal combustion engines and try to use it as a basis for competitive advantage in several different businesses. All of Honda's businesses involve internal combustion engines as a power source until recently. Their businesses include automobiles, motorcycles, outdoor power equipment, generators, and lawnmowers. However, their most recently entered business, corporate jets, is another story. One definition of market power rests on the value of having high market share. Another rests on the notion of increasing the firm's power in its relationship with customers by offering a broad rather than narrow product line. If we have high market power this puts us in a stronger position to deal with buyers. So if we sell products to a buyer and then we go out and acquire several new product brands that the same customer buys we become a more important and powerful suppler to that customer. We also may become a place where the customer may be able to do "one stop shopping." One strategic reason to acquire is to gain complimentary products, resources or strengths. For example, the U.K. record company EMI, which became successful by producing and selling Beatles records, planned in the 1970's to diversify based on their development of the CT scanner. The CT scanner allowed a doctor to view 3-dimensional X-rays of the human body. However, EMI had absolutely no resources to compete in the most important medical market, the U.S. They had no sales or service network and no experience in the U.S. When they entered the U.S. they had temporary success based on being the only firm with the CT scanner. But shortly after their entry the market was taken away by firms that copied their technology and had other strengths in the U.S. medical equipment market. If EMI had acquired a firm in the U.S. with an established service and sales force, established relationships with customers, and other related medical products, they would not have been as vulnerable to competitors. National differences can be a source of complimentary strengths in cross-border M&As. National differences between countries, such as having a national strength in working in groups (i.e., collectivism in Japan) versus that of independent thinking (i.e., individualism in the U.S.) suggest that combining two companies that are based in different countries may result in a stronger combined company. Research shows that the greater the cultural distance of the countries in which merger partners are based the greater the potential benefit (Morosini, Shane, & Singh, 1998). Imagine a product being sold in two separate countries where both markets share the same key success factors (KSFs). Imagine that in one of these markets the parent firm has discovered and successfully utilized the KSFs. However, in the other market the competing firms have yet to discover what these key factors are. The potential increase in value from a firm that has the key information acquiring a firm in another country that does not have the key information should be readily apparent. This is an example of parenting advantage. Parenting advantage, as discussed by Campbell, Goold, and Alexander works according to a three-step process (1995). First, a buyer attempts to identify the KSFs for a potential target firm. Second, the buyer next identifies the subset of KSFs that appear to have room for improvement. These represent parenting opportunities. Third, the buyer evaluates itself to determine if it has the resources needed to help the target firm improve. If there is a match between the parent's resources and the critical success factors with room for improvement then the merger makes strategic sense. Parenting advantage is simply an example of redeploying assets from the bidder to the target. Seth, Song, and Pettit (2002) argue convincingly that cross-border mergers have several sources of potential synergy not available to domestic mergers. One is acquiring a firm in a less risky and more stable country than the firms home country. Second, reducing the risk associated with exchange rates.

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Third, if there is a failure of the input markets of the target firm or there is a lack of growth opportunities in the home market potential for synergy will exist. Finally, the authors argue, there will be reduced variability in the firms earnings stream because of the less than perfect correlation between different markets and because they believe that investors cannot duplicate the same investment portfolio at the same or lower cost. An important motive for many cross-border acquisitions is to use it as a method to enter new markets in new countries. Increasingly firms are acquiring already established firms as the fastest way to enter a new country. Acquisition is the most important method of developing FDI. Often a market may be put into play because it has become deregulated. Firms from other countries may see acquisition of the formerly regulated or state owned operation as the fastest way to gain a strong position in the new market. In addition to being fast in acquiring a position in a particular market, it is a way to gain entry without adding additional capacity to a market that may already have excess capacity. This may be particularly important in mature markets. It may make much more sense in a mature market with established brands names to acquire a brand name and the company behind it instead of trying to grow a new brand name in a market where customer loyalty is hard to change. To protect, maintain, defend or grow a market position, companies may find it necessary to acquire instead of starting from "ground zero." For example, why would a strong and well-endowed competitor like Bridgestone find it useful to acquire a firm like Firestone? If you can buy a brand name, buy distribution, and buy customer relationships in a market that is important this may be considered a strategic motive (Nevin, 1990). In thinking about acquisition as a mode of entry into a new market it is useful to compare it to joint ventures and greenfield entry. Joint ventures, M&As, and greenfield entries have in all common a higher degree of control/risk and higher need for resource commitment. However, M&As offer more control than a joint venture and are faster to implement than a greenfield entry. Furthermore, research shows that foreign buyers are more likely to use acquisition rather than establish a greenfield subsidiary when they do not have clear advantages over their rivals and when they plan to manufacture a product that they do not manufacture at home (Hennart & Park, 1993). Thus firms are apparently acquiring competitive advantage and experience. Economic motives are an important subcategory creating strategic logic. One example is to establish economies of scale. A second closely related reason is to be able to reduce costs due to redundant resources of two firms in the same or closely related industry. Thus if we are acquiring a firm in the same or a closely related industry and there is substantial overlap between the two businesses there may be ample opportunities to reduce costs. A third reason is that the stock of the firms from a particular country may be undervalued. A fourth reason is macroeconomic differences between countries such as different growth rates. Finally, exchanges rates may play a role. Recent research indicates that acquiring a foreign firm when the home country currency has appreciated in relation to the target firms currency has great benefits for the acquiring firm when the industry is highly technological (Georgopoulos, 2008). The merits of using mergers to reduce costs are disputed by managers and by practitioners. For example, managers have been heard to comment that cost reductions are the merger benefit that is most likely to be achieved whereas the achievement of synergy is highly uncertain. On the other hand, Michael Porter argues that what passes for strategy today is simply improving operational effectiveness. Porter argues,"In many companies, leadership has degenerated into orchestrating operational improvements and making deals" (1998). It is understandable how operational effectiveness may have come to be the driving motive for many mergers, however. Often at the same time a merger is announced there will be an announcement of a cost reduction target. For example, when Daimler-Benz acquired Chrysler it was announced that the merger would lead to $1.3 billion of cost savings in the first year mainly through combined purchasing. Of course, with the recent dissolution of DaimlerChrysler its doubtful that any of this was realized.

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Most mergers are, of course, driven by more than one motive. Thus to argue the merits of operational effectiveness versus those of strategy is perhaps a false argument. For example, when the entertainment company Viacom acquired Paramount movie studios cost savings were important because of the need to reduce the resulting debt. But more important was the theme set by CEO Sumner Redstone to use Paramount's entertainment content as the core of a strategy focused on the value of content over distribution. Research shows that one important driver of cross-border acquisition may be undervaluation (Gonzalez, Vasconcellos, and Kish, 1998). This research showed that for cross-border mergers during the period of 1981-1990 U.S. firms were more often targets than bidders. And the data suggest that is was related to differences in valuation. Differences can be due to the stock market or exchange rates or both. Finally, a driver of cross-border mergers may be differences in the macroeconomic conditions in two countries or differences in the way a particular industry is structured in a particular country. In the case of macroeconomic conditions, one country might have a higher growth rate and more opportunity than another other country. Thus it would seem reasonable to expect the slower growth country to be more often home to acquirers while the faster growth country is likely to more often be home to target firms. In the case of industry structure, a firm based in one country might want to acquire a firm based in second country where the second country dominates that industry, e.g. Silicon Valley, Wall Street, and Hollywood.

Firm Performance
Given the discussion about motives, the next logical question is how well have M&As lived up to the intentions of managers. The answer: not very well. Acquisitions, in general, do not appear to result in an increase in value nor do they lead to strong financial performance. More specifically, the research shows that the value of the acquiring firm does not benefit from an acquisition. However, there is some evidence that related acquisitions and cross-border acquisitions with certain characteristics do add value. Though research on cross-border or international acquisitions has lagged behind its domestic counterpart, some studies present evidence suggesting that cross-border acquisitions out perform purely domestic ones (Shimizu et al, 2004). For example, a study by Markides and Ittner shows that, in contrast to their domestic counterparts, 276 U.S. international acquisitions created value for the acquiring firms (1994). A recent and intriguing study found that high tech cross-border acquisitions do indeed create value if the deal has certain characteristics (Benou, Gleason, and Madura, 2007). Using a sample of 503 high-tech cross-border acquisitions, the authors found that the acquiring firm achieved positive valuation results when the target firm had high visibility as a result of media coverage, and was approved of by a top investment bank. Thus, if the acquirer can properly market its deal to the public and investment community positive results are likely to result. This is an encouraging result. There seems to be clear evidence that M&As often fail. But this depends on how one defines failure. If failure is used in an extreme sense, such as the sale or liquidation of the business, then the rate of failure is relatively low. If failure is the attainment of financial objectives, then the rate of failure is high. If failure is attainment of managements broader objectives, then the rate of failure is low. In fact Brouthers, van Hastenburg, and van den Ven (1998) found that the managers of the acquiring firm were overwhelmingly satisfied with their acquisitions. The conclusion on the success or failure of a deal also depends on time horizon over which evaluation is done. Research that has examined short-term stock reaction to merger announcements, have found that the price of the target's stock rises while the stock of the acquirer stays about the same or goes down. Target share prices increase with the expectation that there will be a bid that is successful and involves a premium above the current market price of the stock. Acquirer prices stay the same, in general, as the market reacts conservatively, depending on the specifics of the deal. Though

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these short-term studies have come to dominate merger and acquisition research there is some question whether this is best way to gauge the affect of M&As from a strategic perspective. Those who have judged M&As on a long-term basis and those who that examined success more broadly have reported a more positive outcome. For example, an article from the New York Times reviewed Ford's investment in Mazda and concluded that it has taken twenty-years for the companies to start to reap benefits from their relationship (Strom & Bradsher, 1999). Research which has examined how managers assessed their own mergers found that the managers concluded that they were extremely successful (Brouthers, van Hastenburg, & van den Ven, 1998).

Post-Merger Integration
Integrating merging firms is a process fraught with difficulty. It may well be the most important cause for failure among cross-border mergers. The need for integration has become more intense as mergers have increasingly moved away from unrelated conglomerate mergers to related and horizontal ones. And of course, cross-border acquisitions are more complex than purely domestic ones given differences of national culture between firms. One survey found that one-third of all acquisition failures were because of integration problems (Shrivastava, 1986). Another study suggests that cultural fit has a major effect on post-merger performance and that companies that allow multiculturalism and prevent too much control perform better than less permissive firms (Chatterjee, et. al., 1992). The value of cross-border mergers has already be noted earlier in this paper based on research showing that the greater the cultural distance between merging firms the greater the benefit due to national differences. Furthermore, Michael Porter has argued that the origin of competitive advantage is the "local environment"(1998). Thus if we are a German firm interested in the computer software industry we might want to acquire a firm in the best local environment (i.e., Silicon Valley) and try to help the local expertise spread to the parent firm. A recent book on cross-border mergers, acquisitions, joint-ventures, and alliances concludes," The empirical evidence concerning the performance of cross-border M&As, JVs and alliances so far presented suggests that, when handled effectively, a company can actually turn national cultural distance or initial deep-rooted cultural resistances into lasting practical advantages. Through executive oriented managerial approaches, a company's leaders and key managers can crystallize the potential upside associated with functioning global co-ordination mechanisms across national borders and local cultures" (Morosini, 1998).

International Acquisition Strategy

Research by Duncan and Mtar (2006) examines in detail the successful acquisition of Ryder Transportation located in the US by FirstGroup, the United Kingdoms largest public transportation company. They found that the success of this cross-border deal was due to FirstGroup having ample previous acquisition experience, strategic fit between the two businesses, cultural fit, successful postacquisition integration, and maintaining a focus on the core business. Furthermore, the authors argue that the degree of integration attempted is a very important decision. Based on the work of Hubbard (2001), they discuss four degrees of integration: total autonomy, restructuring followed by financial controls, integration of main systems, and full integration. Deciding the degree of integration that is right for two particular firms depends on many considerations. These include the international strategy of the parent firm, including whether it is pursuing a multi-domestic (different strategies is different countries) or global (same strategy worldwide), extent of strategic, cultural, and organizational compatibility. In a very intriguing study Meschi and Metais (2006) found an inverted U-shaped relationship between acquisition experience and acquisition performance. Their study, however, was based on 291 French acquisitions of U.S. firms and thus may not be generalizable to other country combinations.

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The relationship suggests that firms benefit from learning up to a point and then beyond that suffer possibly from overconfidence or hubris. Another recent study (Quah and Young, 2002) examined four successful mergers by a U.S. automotive firm of firms in Germany, France, and Sweden. The target firms were not identified by name but were referred to as German Security, French Security, Swedish Consultancy, and German Antenna. The study found that what made them successful was the use of a phased approach to integration. In the first phase the acquirer makes few changes and instead worked to gain the trust of the acquired firms. This phrase usually lasted 1-2 years. In phrase two, the acquirer began a series of changes such as replacing the senior management of the acquired firm. This phase took place in years 2-5. The sequential and progressive approach involved specific objectives for each phase while, at the same time, being responsive the environmental changes. The objective of the first phase was to learn about each other and to develop trust. Only then was the integration conducted. Harzing (2002), in a study of 287 subsidiaries belonging to 104 firms during 1995-1996 found that firms following a multidomestic strategy were more likely to use a cross-border acquisition than a greenfield entry. Presumably this would make perfect sense because normally a subsidiary under a multidomestic strategy would be more independent and less integrated with the parent. Thus pairing multidomestic strategy and CB M&A suggests the role and importance of strategic fit. What about the business strategy of the acquirer and the acquired firm? Is there any research suggesting that certain business strategies (e.g., differentiation, cost-leadership, focus) do better with CB M&A? Well yes there is a little. Morck and Yeung (1992) studied 332 acquisitions by U.S. firms of foreign firms between 1978 and 1988. They found that the acquiring firms R&D intensity and advertising intensity, likely to characterize a differentiation strategy, were associated with positive changes in the acquirers valuation. Presumably this effect would be heightened in cases where the target firms industry valued differentiation. Altunbas and Marques (2004) found that for cross-border European Union bank deals higher performance was related to similarity for some firm chacteristics but to differences for others. Higher performance was related to differences in loan and credit risk strategies. It was also related to similarities in capital, cost structure, technology, and innovation. Finally, if we examine some of the well-know international mergers- such as PharmaciaUpjohn, Cap Gemini-Ernst & Young, Chrysler-Mercedes- most of these had trouble because of integration problems. These particular mergers are interesting since they have been documented in some detail either in the business press or in academic journals. Of these, perhaps the biggest lesson can be learned from the case of Pharmacia-Upjohn. After the merger ran into difficulty, a new CEO with the right leadership approach and the right strategy turned it into a success. What is the right CB M&A strategy? The research, though very limited to date, suggests the fitting together the following characteristics: corporate strategy of horizontal growth, an international strategy allowing multi-domestic automony, matching business strategies involving high R&D/advertising intensity and complementary resources, using intense marketing aimed at the international business and investment community, and integrating the firms with a phased approach where the integration is aided by redeployment of resources between the target and the bidder. Much more research needs to be done, of course, but the focus should be on strategy rather on cross-border acquisitions as a whole.

Conclusion
Cross-border mergers are frequently unsuccessful. However, care given to two elements seems to increase the chance for success. The first is strategy. Though the research on exactly what the best strategy actually is, is very limited, strategy does appear to matter. The second element that matters is post-merger integration. Again though the research is limited as to what leads to superior integration, whether it is outside leadership, a phased approach, or something else, it also does seem to matter. More research in these areas needs to be done.

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International Research Journal of Finance and Economics - Issue 15 (2008) Altunbas, Y. & Marques, D. 2004. Mergers and acquisitions and bank performance in Europe: Social Science Research Network, The role of strategic similarities. http://ssrn.com/abstract=587265 Belcher, T. & Nail, L. 2000. Integration problems and turnaround strategies in a cross-border merger: A clinical examination of the Pharmacia-Upjohn merger. International Review of Financial Analysis, vol. 9, 219-234. Benou, G., Gleason, K.C., & Madura, J. 2007. Impact of visibility and investment advisor credibility on the valuation effects of high-tech cross-border acquisitions. Financial Management, 36, 69-89. Brouthers, van Hastenburg, and van den Ven. 1998. If Most Mergers Fail Why Are They So Popular? Long Range Planning, 31, 347-353. Colombo, G., Conca, V., Buongiorno, M. & Gnan, L. 2007. Integrating cross-border acquisitions: A process-oriented approach. Long Range Planning, 40, 202-222. Duncan, C. & Mtar, M. 2006. Determinants of international acquisition success: Lessons from FirstGroup in North America. European Management Journal, 24, 396-410. Georgopoulos, G. 2008. Cross-border mergers and acquisitions: Does exchange rate matter? Some evidence for Canada. Canadian Journal of Economics, 41(2), 450-474. Harzing, A.W. 2002. Acquisitions versus greenfield investments: International strategy and management of entry modes. Strategic Management Journal, 23, 211-227. Hopkins, H.D. 2002. Cross-Border Mergers and Acquisitions: Global and Regional Perspectives. In International Mergers and Acquisitions, (eds.) P.J. Buckley and P.N. Ghauri, 86-116. Thomson, London. Hubbard, N. 2001. Acquisition strategy and implementation, 2nd edition, Palgrave, Basingstoke. Kang, J. 1993. The international market for corporate control. Journal of Financial Economics, 34, 345-371. Meschi, P.X. & Metais, E. 2006. International acquisition performance and experience: A resource-based view. Evidence from French acquisitions in the United States (1988-2004). Journal of International Management, 12. Morck, R., & Yeung, B. 1992. Internalization: an event study test. Journal of International Economics, 33, 41-56. Sirower, M. 1997. The Synergy Trap, Free Press, NY. Morosini, Piero, Scott, Shane and Singh. 1998. National Cultural Distance and Cross-Border Acquisition Performance, Journal of International Business Studies, 29:1, 137-158. Campbell, Andrew, Goold, Michael, and Alexander, Marcus. 1995. Corporate Strategy: The Quest for Parenting Advantage, Harvard Business Review, March-April, 120-132. Hennart, Jean-Francois, and Park, Young-Ryeol. 1993. Greenfield vs. Acquisition: The Strategy of Japanese Investors in the United States, Management Science, 39, 9, 1054-1070. Porter, Michael, E. 1998. What is Strategy? in On Competition, HBS Press, Boston, page 70. Gonzalez, Pedro, Vasconcellos, Gerald, M., and Kish, Richard J. 1998. Cross-border Mergers and Acquisitions: The Undervaluation Hypothesis," Quarterly Review of Economics and Finance, 38 (1), 25-45. Nevin, J.J. 1990. The Bridgestone/Firestone story. California Management Review, 32, 114132. Ni, M, & Wang, J.J. 1999. Research on carrying out strategic alliances in China. Modern Finance and Economics, vol. 12 Jiao, L.J. & Yang, Q.F. 2002. On top manager turnover of acquired firms. Commercial Research, vol. 10. Seth, A., Song, K.P. & Pettit, R.R. 2002. Value creation and destruction in cross-border acquisitions: An empirical analysis of foreign acquisitions of U.S. firms. Strategic Management Journal, 23, 921-940.

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