Cultural differences have played an important role in many of the cases I have been involved in. Sometimes they have helped to speed up a transaction, sometimes they have delayed a transaction – and even prevented a deal being made.
Some of the differences I have experienced are, in my opinion, to do with language. By language I do not mean the use of different mother tongues but also the use of the professional language prevalent among consultants. In our profession, it is easy to forget that not all our clients and others involved in our cases will understand the language terms we use. This goes not only for our international clients, but also for one group of specialists communicating with a different group of specialists in the same company.
Other differences have to do with customs, different ways of doing things. I have been involved in several cases where such [cultural] differences have played a crucial role. A number of these are outlined below.

A British baker’s takeover
A British concern wanted to take over a Dutch family baker. Although the former used internationally recognised norms when determining the value of the Dutch firm (these differed considerably from the norms used by the Dutch side), the deal was more or less finalised. All that had to be done was to work out how best to keep on managers of the Dutch bakers for a while once the takeover had taken place.
The British buyers, aware of the family’s considerable knowledge of and experience in the market, were keen to keep its members in position for a few months.
The takeover was completed, but it soon became clear that the Dutch managers could not come to terms with the regime of the new owners. The strict accounting procedures coupled with the new bookkeeping approach gave them a number of headaches, as did the new company’s answerability to its shareholders.

In the end this all proved too much for the Dutch family and their stay-on was reduced from one year to six months.
A Finnish–Norwegian merger
I represented a Norwegian oil company in its discussions with a Finnish oil company over the integration of their respective plastic divisions. The Finns used the services of an American lawyer; the Norwegians used my firm since, apparently, it was considered large enough and with enough international experience to do a good job. The idea of using a British firm had been considered but eventually rejected: British lawyers were considered to be too expensive, complicated and drawn out in their dealings.
The intended merger itself was on a very large scale: one hundred companies were involved in several countries. Many external parties were also involved, including a British investment bank, which was in charge of the whole project. It relentlessly pushed the project forward knowing that if the merger did not come off it would receive no fee for its efforts.
Once a letter of intent had been agreed upon and ‘due diligence’ reports completed, the real negotiations began, with co-operation on an equal footing being the main goal. The Norwegian party had noticed during its ‘due diligence’ investigations that several of the Finnish companies involved had caused environmental pollution. This would involve a costly clean-up operation and, along with other issues, would make it difficult for a 50–50 deal to be reached. Nevertheless, after a number of long, drawn-out negotiations in several European cities (to underline the European character of the merger), the contracts were signed in England.

During the process, clear differences in working practice between the American and Dutch lawyers emerged. The Finn’s American lawyer made a note in detail and required every point to be covered – preferably twice – in the agreement. This slowed down the whole process, particularly when the American lawyers acted as if they were the spokespersons of the company and even appeared to be making decisions on the company’s behalf. The Dutch lawyers behaved as they usually do: they are there to advise the client along with other advisers (accountants, tax consultants, etc.). They consider it natural that in the end it is the company’s directors who determine policy and take the decisions.
Further differences emerged in behaviour during the negotiations. The lawyers representing the Finnish partners showed a rather aggressive attitude throughout and this contrasted strongly with the quieter, more modest approach of the Norwegians’ lawyers. The Norwegians were somewhat intimidated by the American lawyers and had to be reassured that the less contentious approach in no way undermined the justness of their cause.

A French takeover of a Dutch concern
Language turned out to be a barrier when a French group of companies decided to take over a Dutch company. During the research phase prior to the negotiations, the French sent several employees from the Alsace region of France to carry out interviews in the Netherlands. They assumed that the dialect spoken by these colleagues would enable them to communicate with their Dutch counterparts. When this did not turn out to be the case, everyone involved started using English.
English was used during the negotiating phase, but its role in the actual written agreement was hotly disputed. The French preferred to have the takeover contracts written in French, the Dutch in Dutch. In such a situation, a contract written in a neutral language is the best solution, especially since legal terms written in one language can have a very different meaning in another. If both sides can agree on a neutral language, then agreements can be reached on what the legal terms used actually mean.
In this particular takeover, neither side would back down and, for a while, the language question threatened to scupper the whole deal. Eventually, however, after a further round of protracted negotiations, an agreement was reached and the deal went through. The takeover contract was drawn up in French for the French group of companies and in Dutch for the Dutch concern. An English version was made for reference during face-to-face encounters.

Questions

1. The author of the article above mentioned some cultural differences he has encountered in dealing with companies abroad: language (different mother tongues and professional language) and customs (different way of doing things). Note the kinds of cultural differences – language, customs or others (say what they are) dealt with in the three cases:

a) A British baker’s takeover;

b) A Finnish–Norwegian merger;

c) A French takeover of a Dutch concern.

2. Describe the differences in attitudes and working practices of the lawyers and the people involved in the process of the three mergers/takeovers.

3. Write a conclusion to this article: make a synthesis of the three cases and answer the question: what have I learnt from this account about the cultural aspects in international mergers and acquisitions?