Bordeaux Ecole de Management (BEM) and Euromed Marseille have recently announced their merger (http://www.ft.com/intl/cms/s/2/32573bbc-429a-11e1-97b1-00144feab49a.html#axzz1jsc1WYVg). This will create a new giant in the French and European landscape with a 90 million Euros budget, more than 9000 students, 160 academics and 35000 alumni. It is interesting to note that Euromed has been looking for a partner for many years. It first approached Ceram (the business school in Nice/Sophia Antipolis) but the project aborted apparently because of the reluctance from their respective shareholders (the local Chambers of Commerce). Then, Euromed engaged into deep talks with Toulouse Business School in 2011 but no agreement was reached. So, the question remains if BEM is partner by default for Euromed and if clear synergies can occur.
Mergers are not new in the French competitive landscape. Tours and Poitiers Business Schools merged a few years, CERAM (Nice) and ESC Lille (Lille) merged 2 years ago to create SKEMA, there is project of a “France Business School” which would see more than 6 business schools merging, Rouen and Reims business schools have also announced a merger,…
The main reason behind these mergers is the intensity of the local competition. Despite being international and being recognized as such, French business schools still rely mostly on the local French market. And this market is strongly influenced by local rankings, which have many size-related criteria. So being bigger automatically brings more points in the rankings. It is similar to the movement of mergers of French universities and research centers to answer the criteria of the ARWU “Shanghai” ranking.
Then, as for many mergers in other industries, the risk of failure is high for several reasons. Business schools are culturally different, building on their 100+ years’ history for most of them, and are generally strongly anchored in their respective territories, including the strong influence of the local Chambers of Commerce. Then, the question of the financial synergies is yet to be answered, not to mention the cost of the mergers and the potential issues on the brand (keeping the 2 names, creating a new one,…?). Economies of scale are not obvious, particularly for campuses located several hundred kilometers away. So, will the value of the new entity be higher than the value of the 2 former ones is questionable, as it is again for many mergers in other industries. The impact on the financial results could be negligible. In some ways, one of the positive characteristics of French business school is that they are totally independent from universities and as such, able to be very reactive. And becoming bigger is not generally synonymous with reactivity or proactivity. The main positive aspect is in terms of international visibility. It could push more foreign students to opt for a degree from a French business school (the offer of programs 100% in English is common in France). It would also help French business schools in the opening of branch campuses abroad, a strategy, which despite regular announcements, is only timidly pursued, particularly compared to the initiatives of UK, US and Australian business schools. Hopefully, the local reasons behind these mergers will generate positive international spillovers.