10th August 2017

Company culture is critical for a successful M&A

Blog post

A study released by the Institute for Mergers, Acquisitions and Alliances revealed that 83% of M&As fail to deliver on expectations and boost shareholders’ returns. A clash between cultures is one of the most frequently quoted reasons behind failure.

During and post mergers, companies generally prioritise financial and structural aspects. Few organisations invest significant resources into integrating two disparate cultures. But if the organisational culture of the newly formed business is inconsistent, processes and handoffs may break down.

Therefore, to ensure a successful integration and deliver significant business value, leaders should invest time and resources into assessing and understanding the two cultures that are coming together as soon as they start the due diligence process for the M&A.

Luckily, nowadays business leaders can use smart and powerful diagnostic tools like F1.1, to cut through the noise and guesswork and access critical insight in just a matter of hours.

By assessing and understanding the two cultures that are coming together and listening to employee feedback, senior managers can learn what truly drives the employees and understand what improvements are needed for the new company to become more efficient.

In this way they’ll clearly understand exactly what they are inheriting, warts and all, and ensure they are primed to tackle any key issues head on rather than discovering them only after the two companies have merged.

If you can understand in advance of any deal being done what the difference is between cultures, you can proactively work towards defining a new shared culture that incorporates the best of both areas.

It’s not uncommon for both parties to feel, post-merger or acquisition, that they aren’t sure what the company is any more or what it stands for. There will be a jostle to work out roles and responsibilities, ways of working and systems and processes. Knowing where the gaps are in perception and thinking from the two groups, both before and throughout the merger, (including up to a year / 18 months afterwards) can tell you all the things that should be worked on in order to make this a total success.

If left unattended, company culture could undermine the newly formed organisation and have a negative impact on its progress and value.

In conclusion, dedicating time and resources to developing and articulating a strong organisational culture from the early stages of an M&A can help the newly formed company overcome many challenges and deliver significant business value.


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