Another Failed M&A : Misaligned Business Models as Culprit

Literature on Business Models (BMs) has grown very rapidly since the beginning of the 21st century, and although the theoretical and empirical literature has developed significantly, the number of practical and management-oriented studies remains relatively low. A recent debate in the field has focused on the definition of BM invariants: (1) sensing customer needs, (2) creating customer value, (3) sustaining value creation, and (4) monetizing value. Extant empirical studies have mainly focused on Multinational Enterprises (MNEs) and successful BMs; however, this study concentrates on the failure of BMs in the case of Small and Medium Enterprises (SMEs). An important source of a BM's failure is the misalignment between MNE and SME involved in an acquisition. Looking through the lens of the four BM constants, the aim of this study is to examine the case of the acquisition of Domestic Heating (an SME) by Ventilair (an MNE). Although both separate entities were achieving good results and each had a specific BM, the acquisition produced poor results mainly due to the misalignment of the two BMs. Our findings lead us to make recommendations to practitioners on avoiding BM misalignment during an acquisition. We encourage practitioners to enhance communication, promote organizational experiments, acknowledge specificities of both entities, foster employee commitment, and ensure homogeneity in IT system usage