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Companies can grow through organic expansion or through various forms of external association with other companies. In conditions of rapid change, high innovation costs, and the scramble for strategic positioning in many sectors, expansion though external means has become an absolute necessity. The main options for external collaboration range according to the degree of integration between a company and the others that join it (Child and Faulkner 1998). Integration can be based on a number of factors: ownership, contractual agreement, 'lock in' through the commitment of highly specific assets, and common management structures. Cooperative agreements are normally the least integrated and involve arm's-length relations between the partners. They are typically based on IAS exam contractual agreements and their management requires little more than liaison between the partners. Joint ventures entail greater integration between the participating organizations. The joint venture or other combined unit will have its own management structure and hence the need to adopt a coherent set of management practices. It is not unusual for one company to be the lead partner and this solution is often favored as a way of ensuring that the alliance has a common sense of direction and a unified management. Acquisitions and mergers aim at even more integration. A significant difference between a typical acquisition and a typical merger is that the latter aims at the total integration of two or more partners into a new unified corporation. By contrast, while some acquiring companies may choose to subsume their acquisition entirely within the parent organization, many continue to run them as subsidiaries. Acquisitions permit a degree of choice on the issue of integration that mergers normally do not. While new cooperative agreements and joint ventures are being established all the time, there is a tendency for joint ventures and other alliances to become acquisitions after a period of years. It has been estimated that the median lifespan for alliances is only about seven years and that nearly 80 per cent of equity joint ventures—one of the most common alliance structures—ultimately end in one of the partners selling its stake (Bleeke and Ernst 1995). This sale is often to another partner. MNCs in particular generally seek to move joint ventures with local partners, whom they originally established for purposes of market entry or to acquire specific knowledge, into subsidiaries. Many mergers also start off ostensibly as marriages of equals, with one partner subsequently becoming dominant. At the time of writing a joke is circulating in Germany about the merger in 1998 between Daimler-Benz and the Chrysler Corporation, in which signs of growing dominance by the first partner were already becoming apparent. The question is asked: 'what is the correct way to pronounce "Daimler-Chrysler"?' The answer is: 'Chrysler is silent.' Acquisitions are unequal partnerships. This may appear to be a contradiction in terms, but it does seem to reflect the kind of accommodation that so often evolves in other forms of collaboration in which partners in the first instance are formally equals. Under modern competitive conditions the IAS test and the unequal partnership characteristics of acquisitions can become a liability if careful attention is not paid to the way in which acquired companies are managed. Acquisitions are expected to derive benefits from the importation of new resources and superior practices into the acquired companies, together perhaps with more disciplined and focused managerial control. At the same time, companies do not necessarily spend large sums of their shareholders' money just to gain greater market share or impose stricter control over under-exploited assets. They may also be seeking to acquire highly effective intangible assets of creativity, know-how, and long-established relationships with customers and public bodies, in order to enhance their competitive capabilities. If the way post-acquisition management is handled causes these intangible assets to be damaged, or fails to give them space to perform, the realized value of an acquisition may be substantially less than was anticipated. Post-acquisition management is one of the main challenges in a world with so many acquisitions, the majority of which do not realize their anticipated benefits
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