"Only if you want them to." Come on Ron--nobody goes into a mixed merger wanting them to spell trouble. The issue is not the type of marriage. The issue is the combination of context and the culture's readiness for change.

I certainly agree with you that dramatically different cultures can co-exist. But the data says that is merely the possibility, not the norm.

Two key reasons that I'm with George on this big time (well a third if you count that he is my friend).

First, the rate of mergers and acquisitions that don't achieve their promised economics is a much higher 75%-80%. You'd be better off just taking your money to Vegas! Divergent cultures add a substantial risk factor that will require a great deal of time and resources to offset this. Most acquirers lack the will and patience to address this.

Second, having done three acquisition integrations myself, I believe there is no such thing as a true "merger" of equals. There is always an alpha player. You better make sure that the other culture is prepared to substantially buy in to the alpha's culture, because that is what is going to happen!

George's notion that you have to match company cultures in order to have a successful merger/acquisition is overly simplistic. Since companies make acquisitions (hopefully) either to improve their current position, eliminate a competitor, or change their business model, executives and management consultants will rarely focus on the culture over the financial benefits. And culture is such an amorphous concept that it would be virtually impossible to match companies on it. Unfortunately, Ron's belief that you just have to clearly define the type of "marriage" is a bit of a truism. If all you want to do is combine balance sheets, you don't have to do much regarding culture, but that isn't how the vast majority of m&a is handled.

The real answer is that m&a activity is most likely to succeed when both companies treat each other's people with mutual respect, give each other the assumption of positive intent, and work their tails off to bring the two organizations together. Rosabeth Moss Kanter (2009) makes the simple point that value is created when you devote as much time to integrating the people (not talent or human capital) as you do to integrating the finances and IT systems.

It depends on the extent to you want to integrate the operations of the organisations as Ron says. However, the "all you need is the willingness to change" sounds too easy-by-half analysis for how to make mergers of disparate cultures work, especially if you want full integration. Corporate culture evolves over a long period and is shown to be very difficult to change. Most people also assume that it is up to the acquired company to change. It is in many cases just as important for the acquiring company to adjust itself to the new reality. Cultural due diligence is a must: not just of the other company but your own as well.

Responding to Bill Berman's comment that "George’s notion that you have to match company cultures in order to have a successful merger/acquisition is overly simplistic":

That's not my notion. Matching company cultures is not overly simplistic. It's impossible.

Per my friend Mr. Kangis' point that there are no mergers of equals, and Mr. Olcott's point that cultures evolve, the issue is not matching; it's understanding the context and the culture so that you can manage the evolution. This is what's so difficult about merging cultures and why the odds are stacked so far against "mixed mergers."

In answer to George...perhaps I should have said that "mixed mergers" only spell trouble if you let them. As others have commented, putting two companies together is hard work no matter how willing people are to change. I would also add that it's hard work even if the cultures are similar--because in reality no two companies have exactly the same cultures. Even if they look similar and profess to have similar values, there are subtle differences that can override the best of intentions. For example, when two advertising firms merged a few years ago, they thought that it would be simple because the cultures were alike. But when they started working together, they realized that they communicated differently, placed different emphases on creativity, and treated customers differently. This made things extremely difficult, and the combined firm was ultimately not successful. So in the end it's up to leadership--to determine the goals of the merger, and drive the necessary work to achieve those goals. If they relax in their intensity because they think the cultures are similar, it can lead to the same failure as with mixed cultures.

Too often culture, especially of an acquisition target, is viewed as a liability rather than an asset. Too often growth play acquisitions fall apart when the culture of the acquired company is not leveraged, resulting in talent and customer loss (think Daimler-Chrysler). Cultural differences are more likely to become liabilities when the strategic purpose behind an acquisition is poorly realized. But when acquisitions are well realized, a synergistic culture is more likely to emerge (think Disney-Pixar).