Merging Professional Service Firms

Abstract
The prevailing theory of mergers is that firms emphasize considerations of “strategic fit” in discussions prior to merger activity, and neglect considerations of “organizational fit”. The result is that immediately following a merger dysfunctional organizational behaviours occur. The number of empirical studies of mergers, however, is relatively modest and there are few case studies of the merger process. The present paper studies the merger involving two large accounting firms, over a period of four years. The unique features of accounting firms—in particular, their organization as professional partnerships—and of the accounting industry, make the case study an appropriate “tough” test of the general theory. Accounting firms are likely to take account of organizational fit in merger discussions. The case study rehearses the careful attention to issues of strategic and organizational fit (contrary to the general theory) but also maps the unfolding behavioural problems that followed formal merger. Interest...

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