Merging and Demerging in Organisations: Transforming Identities

Abstract Around eighty percent of cross-border mergers do not succeed. Despite a substantial body of literature offering guidance on how to make them work, success remains elusive. Regardless of strategic direction, involving macro-level planning, restructuring of positions and improved remuneration, repeated failure indicates there is clearly a gap in our understanding. It is proposed that mergers and acquisitions (M&A) constitute a threat to social identity by disrupting longstanding patterns of relating between people. This is experienced as emotional anxiety, which is personally felt and collectively shared. In response, social defences are invoked that alleviate this distress but simultaneously inhibit the processes of recognition and conflict necessary to effect identity transformation. New relationships and connections do not therefore form and, consequently, new identity does not emerge. Hence, M&A fail. Attending to complex responsive processes of relating, particularly pertaining to the preservation and transformation of identity is crucial to the successful outcome of any M&A project. Using reflexive narrative, I have shown how anxiety and protective processes arise and offer insight into executive interventions that may be helpful. This research offers a new approach and an advance in our understanding of the social processes at work during M&A.