Mapping the risks of mergers and acquisitions: the case of the takeover of Marocaine Vie by the Societe Generale Group

Abstract

Mergers and acquisitions operations continue to raise many questions about their managerial and financial efficiency. While there is undeniably an interest in this type of rapprochement, the reality of operations reveals that mergers and acquisitions are one of the most faced challenges. When they are mismanaged, they release a very large number of risks.

Concretely, these risks can take several forms, such as those related to the “Due Diligence” process, the integration phase, lack of preparation or ignorance of the target, synergies between the two companies that may prove disappointing, etc. This is only the tip of the iceberg. The bulk of the mergers and acquisitions operation’s risks, as in the case of Marocaine Vie’s acquisition by the GSG, only appear later on, when the acquirer really discovers its target and realized that the expected synergies are not necessarily there. The way the integration process is handled seems to generate risks at all stages. Thus, this article’s objective: identifying and describing in an objective and structured way the specific risks to each stage and figuring out how the decision to deal with a certain number of risks during the first phase would lead to new risks’ appearance during the second and third stages. To do so, we will first present the context for the takeover of Marocaine Vie by the GSG. Then, we will specify the different stages that marked the post-acquisition phase, known as the integration phase. Finally, we will expose the risks inherent to each stage and deduce the overall mapping.

JEL Classification: G32 & G34

Paper type: Theoretical research