Macquarie University/The Lighthouse
Research: Family Firms Excel in Managing Mergers
Mergers and acquisitions (M&As) between companies can cause significant upheaval, particularly for employees fearing restructuring and layoffs.
A new study, based on data from 1173 firm mergers and published in the Academy of Management Journal, found family firms tackle the issue of job security during a merger differently to non-family firms, with many viewing employees as part of their extended family.
Lead author Professor Francesco Chirico from the Macquarie Business School Department of Management, says M&As are major events that bring both opportunities and challenges for business owners and employees.
Researchers collected data from 1173 Swedish firm mergers, and conducted interviews with owners and managers of family and non-family firms in Australia, Sweden, Norway, the USA and India.
“Job security is a major concern during a merger,” says Professor Chirico.
“Our research explores how family firms navigate this challenge differently compared to non-family firms, and highlights the advantages of merging with other family businesses.”
Professor Chirico is a co-Director of the Macquarie University Innovation, Strategy and Entrepreneurship Research Centre. The Centre studies how firms innovate, grow and adapt through strategic leadership and entrepreneurial thinking, with a particular focus on resilience in times of change.
He says the ability to excel in challenging times is rooted in the social identity of family business owners. Social identity theory refers to the process by which individuals define themselves based on shared attributes, values or goals.
“The similarity of family owner social identity fosters greater integration between merging parties. Family owner pairs tend to retain some autonomy through their employees. They view employees as part of their extended family and value long-term relationships over short-term cost-cutting.
“During a merger between two family firms, both ownership groups tend to agree on keeping employees to ensure continuity, which leads to lower staff turnover. Our research describes this as maintaining ‘calm in the storm’.
“Retaining employees helps preserve critical company knowledge and experience, which smooths the integration process. A stable workforce also enhances productivity and commitment, and contributes to better financial performance post-merger.
“Family-to-family mergers offer unique advantages by balancing continuity, stability and performance. This is a powerful strategy for long-term success.”
A striking recent international example demonstrates this dynamic: when initial negotiations between Fiat Chrysler and the French government-backed Renault faltered, the shared identity and mutual understanding between representatives of Fiat’s Agnelli family and Groupe PSA’s Peugeot family ultimately facilitated a successful merger agreement.
Francesco Chirico, pictured, is a Professor of Strategy and Family Business in the Department of Management at Macquarie Business School.
Similarly, in Australia, the families of Robert Covino and Peter Staples, representing Mirus Australia and Management Advantage (ManAd) respectively, announced a merger in March, 2025. This initiative, facilitated by Owen Matheson, CEO/Director of Mission Critical and Aligned Equity, aims to enhance aged care and improve the quality of life and care for aging Australians and their families.
Professor Chirico’s research also found that when family firms merge with non-family firms, conflicting priorities can arise. He says non-family firms often focus on restructuring for efficiency, which leads to more layoffs and disruptions.
“Another interesting finding was that family firm mergers perform even better when the businesses come from different industries,” Professor Chirico says.
“When this happens, each family maintains its identity and avoids direct competition within the new entity, while still benefiting from diversification.”
Professor Chirico says family business owners considering a merger should take into account that social identity and employee security are crucial. The study offers practical takeaways for business owners considering a merger:
Partner with another family to provide greater stability for employees and increased long-term success.
Prioritise employee retention, as this leads to better performance and integration post-merger.
Consider a cross-industry merger. These engender collaboration while maintaining individual business strengths.
Maintain a shared vision and long-term focus.
Francesco Chirico is a Professor of Strategy and Family Business in the Department of Management at Macquarie Business School. He is also a co-Director of the Macquarie University Innovation, Strategy and Entrepreneurship (ISE) Research Centre.
https://lighthouse.mq.edu.au/article/june-2025/calm-in-the-storm-study-finds-family-firms-are-better-at-managing-mergers