Tariffs, trade wars and rising nationalism may command headlines, but they have done nothing to dent global dealmaking. More than $2.5tn in mergers and acquisitions have already been announced this year and, if the pace continues, 2018 is likely to surpass 2015’s $5tn in M&A deals.
Partly, this reflects the end of a long cycle of easy money in which companies are looking to get that last bit of juice out of their stock prices. Some of the largest deals, such as AT&T-Time Warner, Disney-Fox, or CVS-Aetna, are about traditional companies trying to compete with the big internet groups by building scale. Either way, it is worth remembering that more than half of all mergers destroy shareholder value. Think of the cautionary cases of AOL-Time Warner, Quaker-Snapple or Daimler-Chrysler.
What sets successful mergers apart from the failures? In large part, it is having a good cultural fit. Corporate culture is, of course, predicated on many things: a company’s nation of origin, the type of talent it calls for, the industry it is part of and so on. But all these things can be categorised in a binary way: is the culture “tight” or “loose”?