M&A Synergies Framework—Introduction

Companies pursue mergers and acquisitions (M&A) in hopes of realizing synergies from the successful combination of two or more business organizations. Synergies are the advantages resulting from M&A that make the combined organizations more effective than the sum of their separate parts. Typically, synergy refers to measurable financial results—for instance, higher profits or lower costs—in the combined whole company post M&A than the individual companies achieved independently. In essence, synergy is an attempt to make the equation, “1 + 1 = 3,” become true.

Developing the Mergers and Acquisitions Synergies Framework

In 2015, U.S. companies engaging in cross-border M&A (as either the bidder or the target) completed nearly 4,000 transactions paying over $700 billion.1 Deloitte, in their 2018 M&A Trends, report that corporate executives expect an increase in M&A activity in 2018, in both the number of deals and the size of the transactions.2 The ever-increasing volume and value of transactions adds to the hastened urgency to reconsider the often-overlooked differences in national culture. Whether acknowledged or not, differences in national culture permeate every aspect of a business deal. Depending on how management approaches culture, it can become a devastating divide between the merging companies, or a source of great creativity, growth, and profitability. Thus, cultural synergy, although sometimes difficult to achieve, can have a direct role in realizing financial synergies. A successful merger requires “improving cultural sensitivity by increasing knowledge and appreciation about a new country and its culture and by increasing awareness of the norms and behaviors needed to be successful in a new culture.”3 Success is often measured by employee acceptance of the merger, more efficient integration of processes and management, increased profitability, share price, and market share.

Although existing cultural research has been considered useful for M&A activity, a comprehensive M&A framework has not been developed. To develop a suitable framework, we review and synthesize the well-established literature on culture, including work from Geert Hofstede, Sidney Gray, and Erin Meyer.

Existing Culture Literature

Hofstede’s Cultural Dimensions Theory. Geert Hofstede4, a Dutch social psychologist, was one of the first to develop a usable cultural framework to explain the intricacies of general national culture differences. Hofstede developed four values (known as “cultural dimensions”), presented the opposing poles of each, and explored the relative positions of various countries on these scales:

      • Individualism vs. Collectivism
      • Large Power Distance vs. Small Power Distance
      • Strong Uncertainty Avoidance vs. Weak Uncertainty Avoidance
      • Masculinity vs. Femininity

Since their introduction, these four dimensions have been extremely influential in shaping the direction of socio-cultural studies. His seminal book, Culture’s Consequences: International Differences in Work-Related Values, and other subsequent work on culture have been cited by thousands of researchers.  Despite the contribution of his groundbreaking work, Hofstede’s studies have received their share of criticism for incompleteness or inaccuracy, especially since the original study participants were all IBM employees and predominantly male. Some have opined that the dimensions incorrectly assume nationality as equivalent to culture, show too much reliance on quantification and indices, and perhaps are more reflective of GDP differences rather than culture at all. 5 Even though criticized, Hofstede’s values effectively break down the general term of “culture” into definable and relatively stable dimensions. Furthermore, they are generally well-received, and lend themselves to easy comparison because of the accompanying measurement system Hofstede developed.

In addition to the four original cultural dimensions, Hofstede later added two others based on his subsequent studies and collaboration: Confucian Dynamism, and Indulgence vs. Restraint.6 However, after extensive study, they have not been included as elements of the framework due to their indistinct definitions, unclear applications, and debated academic acceptance.7

Gray’s Accounting Dimensions. Sidney Gray applied Hofstede’s dimensions to the accounting world and developed four theories of cultural variations between national accounting mindsets and practices:8

      • Professionalism vs. Statutory Control
      • Uniformity vs. Flexibility
      • Conservatism vs. Optimism
      • Secrecy vs. Transparency

These values have been empirically tested many times using various cultures. They are important to M&A because accounting is considered the language of business and provides measures for determining the financial success of the combined companies. Although there have been mixed and sometimes contrary results during re-testing, most imply that accounting differences are indeed tied to national culture.9 Thus, research suggests that, “differences in accounting practices are manifestations of nationally different social systems. By virtue thereof, culture and accounting are inextricably linked.”10 An awareness of these differences is important in the M&A process to understand properly the counterpart company’s financial statements as well as to prepare to integrate the finance and accounting processes. Gray’s dimension scales show culture defined by regions. Chart 1 provides a summary of the countries that Gray classified into each region.

Chart 1

Adapted from Gray, 1988

Meyer’s Culture Map. The collection of research and stories in The Culture Map by Erin Meyer identifies additional cultural “scales” that manifest themselves in the actions and work styles of people from different cultures:

      • Low context vs. High context
      • Direct vs. Indirect Negative Feedback
      • Principles First vs. Applications First
      • Egalitarian vs. Hierarchical11
      • Consensual vs. Top-down
      • Task Based vs. Relationship Based
      • Confrontational vs. Avoids Confrontation
      • Linear Time vs. Flexible Time

The definitions and applications of these values, as developed by Meyer, have been incorporated into the M&A Synergies Framework and are especially useful in understanding and improving interpersonal interactions.12


Just like Albert Einstein’s theory of relativity deals with a person’s relative perspective of time and space, culture researchers like Hofstede and Meyer found that culture must be measured by comparison to other nations. In both Hofstede’s and Meyer’s frameworks, each country has been arranged relative to other countries on a scale. This approach is necessary since a country’s measure does not gain meaning from its absolute position on a scale but rather a position relative to other countries in that set.  For example, two countries can both be considered low-context cultures on the overall scale, but between the two countries alone, one will be higher context than the other one. This relativity is the important relationship since comparative cultures will affect the interactions between the two countries. We acknowledge that cultures may change slowly over time; however, Hofstede theorizes that all cultures tend to move together so their relative position to other countries holds constant. In essence, if cultures change, they change together.13

M&A Synergies Framework

The M&A Synergies Framework provides categorized definitions for the elements that are of greatest importance in cross-border M&A. The intent of the M&A Synergies Framework is to incorporate existing cultural value studies and related research to provide insights for the businessperson facing the complexities of a cross-border merger or acquisition. Although primarily cultural, the elements of this framework also incorporate logistical and strategic components (e.g. communication methods and public perception) since these also impact the pursuit of synergies. The framework is developed to answer the question, “What are the cultural complexities of international M&A?” We use real-world examples involving U.S. based companies to anchor the understanding of the U.S. international businessperson and aid them in developing integration strategies to drive synergies in their own cross-border M&A ventures. The Framework consists of five main categories:

M&A Synergies Framework

      • Communication
        • Information Availability
        • Communication Style
      • Behavior
        • Core Values
        • Characteristics
      • Management
        • Leadership
        • Decision Making
      • Environment
        • Public Acceptance
        • Logistics
      • Accounting and Finance
        • Accounting Methodology
        • Professional Behavior


  • We present and discuss each element of the Framework in the following sections and provide a template to be used in M&A activity in the last section with concluding comments.


  1. Institute for Mergers, Acquisitions & Alliances (2016). [Graphs titled “Cross-border M&A US by Value” and “Cross-border M&A in the US by Numbers”] M&A in the United States. Retrieved from https://imaa-institute.org/m-and-a-us-united-states/
  2. Deloitte. (2017). The State of the Deal. M&A Trends 2018, 1-24.
  3. Schuler, R., Tarique, I. & Jackson, S. (2004). Managing Human Resources in Cross-Border Alliances. Advances in Mergers and Acquisition. Advances in Mergers and Acquisitions. p. 103-129.
  4. Hofstede, G. H. (1980). Culture’s consequences, international differences in work-related values. Beverly Hills, Calif: Sage Publications.
  5. Baskerville, R. F. (2003). Hofstede never studied culture. Accounting, Organizations and Society, 28(2013), 1-14
  6. Minkov, M. & Hofstede, G. (2011). The evolution of Hofstede’s doctrine. Cross Cultural Management: An International Journal, 18(1), p. 15
  7. Minkov, M. & Hofstede, G. (2011). The evolution of Hofstede’s doctrine. Cross Cultural Management: An International Journal, 18(1), 10-20; Fang, T. (2003). A Critique of Hofstede’s Fifth National Culture Dimension. International Journal of Cross Cultural Management, 3(3), p. 350
  8. Gray, S. (1988). Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally. Abacus, 24(1), p. 8
  9. Salter, S. B. & Niswander, F. (1995). Cultural Influence on the Development of Accounting Systems Internationally: A Test of Gray’s [1988] Theory. Journal of International Business Studies. 26(2), p. 382; Koleśnik, K. (2013). The Role of Culture in Accounting in the Light of Hofstede’s, Gray’s and Schwartz’s Cultural Dimensions Theories – A Literature Review. Financial Internet Quarterly e-Finanse, 9(3), p. 40
  10. Askary, S. (2006). Accounting professionalism – a cultural perspective of developing countries. Managerial Auditing Journal, 102-111
  11. Note: The value Egalitarian vs. Hierarchical is considered conceptually equivalent to Hofstede’s Low vs. High Power distance. The value appears in the framework with Hofstede’s naming.
  12. Meyer, E. (2014). The Culture Map: breaking through the invisible boundaries of global business. New York: PublicAffairs.
  13. Minkov, M. & Hofstede, G. (2011). The evolution of Hofstede’s doctrine. Cross Cultural Management: An International Journal, 18(1), p. 13