Another failed M&A: misaligned business models as culprit

Gaël Le Floc’h and Laurent Scaringella
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Gaël Le Floc’h: ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business
Laurent Scaringella: ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business

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Abstract: Purpose Literature on business models (BMs) has grown ve ry rapidly since the beginning of the twenty-first century, and although the theoretical and empirical literature has developed significantly, the number of practical and management-oriented studies remains relatively low. A recent debate in the field has focused on the definition of BM invariants: sensing customer needs, creating customer value, sustaining value creation and monetizing value. Extant empirical studies have mainly focused on multinational enterprises (MNEs) and successful BMs; however, this study concentrates on the failure of BMs in the case of small and medium enterprises (SMEs). An important source of a BM's failure is the misalignment between MNE and SME involved in an acquisition. Design/methodology/approach Looking through the lens of the four BM constants, the aim of this study is to examine the case of the acquisition Domestic Heating (an SME) by Ventilair (an MNE). Findings Although both separate entities were achieving good results and each had a specific BM, the acquisition produced poor results mainly due to the misalignment of the two BMs. The findings lead the authors to make recommendations to practitioners on avoiding BM misalignment during an acquisition. Originality/value The authors encourage practitioners to enhance communication, promote organizational experiments, acknowledge specificities of both entities, foster employee commitment and ensure homogeneity in IT system usage.

Date: 2017-09-18
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Published in Journal of Business Strategy, 2017, 38 (5), pp.18-26. ⟨10.1108/JBS-05-2016-0049⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04084568

DOI: 10.1108/JBS-05-2016-0049

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