The role of public relations and formal and informal socialization during mergers and acquisitions

For the past 35 years, mergers and acquisitions have been the predominant growth strategy for major corporations, with recent transactions growing at near exponential rates. Unfortunately, the majority of these combinations will not live up to expectations and many will fail altogether. The fault is most often attributed to “cultural conflict” and “poor communications,” but surprisingly few studies have empirically tested these assumptions.;Utilizing strategic management, acculturation and socialization literature, this study examined the process of integrating cultures in mergers and acquisitions and the role that the public relations function plays in developing internal communications to socialize newly acquired employees to a new company culture. Both formal and informal communication and training activities were explored. Data were obtained through secondary sources and a telephone survey of 108 executives of corporations that had recently undergone a merger or acquisition valued at more than ;Using ANOVA, simple regression and path analysis, the study tested hypothesized relationships between 12 variables—Relatedness, Integration Strategy, Acquisition Motive, Management Style, Firm Size, Socialization Level, Conflict, Attrition, Perceived Outcome, Experience with Prior Mergers, Experience with Employee Communication, and the Role of Public Relations in the Planning Process.;The study's results provide insight into contradictory findings of several past merger studies that examined in isolation the role of relatedness, firm size, and socialization on merger performance. The results suggest that there is a positive correlation between these three constructs, and that a negative consequence of conflict, attrition, can be mediated through socialization efforts to achieve a positive outcome. Interestingly, no direct relationship between conflict and socialization could be found (not the hypothesized relationship that strong socialization would result in low conflict, nor its inverse, that high conflict would stimulate high socialization efforts.) Nevertheless, a positive relationship was found between acquisition motive and both formal and informal socialization efforts and between formal socialization and the overall performance of the merger. High attrition levels and high involvement from the public relations function were also positively related to formal socialization, suggesting that the PR function was tapped more frequently during mergers that were likely to encounter high conflict and high turnover, and when it was.