The success of a merger or acquisition is often a function of how well the two organizational cultures have been integrated. Any time two organizations are being merged, there will be cultural conflicts that need to be reconciled. Cultural integration needs to be managed, carefully managed, instead of leaving it for everybody to work out on their own.
M&A culture due diligence is an exercise that identifies the cultural differences between the acquirer and seller in mission-critical areas such as communication, decision making, and performance management.
Culture seems to appear at the top of everyone's frustration list when talking about M&A. When mergers fail, the most frequently cited cause is cultural conflict. Nonetheless, few companies invest much time, if any time at all, in cultural due diligence. Often culture seems too fuzzy and soft. It does not have the clarity of financial analysis and other types of due diligence so many executives don't bother with it. Or they simply assess culture based on their impressions of the executives they are working with when negotiating the deal. Before close, at a minimum acquirers should identify where they converge or diverge with the target company on operating philosophies and performance management.
M&A culture integration is the process of assessing merging companies cultures, identifying the gaps between the two cultures, determining which gaps should be closed and then deciding how to close them. Since culture is deep rooted and extraordinarily difficult to change, only the cultural changes necessary to achieve a deal's benefits should be included in the scope of an integration. This focused, targeted approach is practical and viable. Attempting to build one common culture during an integration is not.
Free M&A Culture Presentations and Assessments
Download the below free M&A culture presentations, research, and assessments that educate acquirers about how to best perform cultural due diligence and integrate disparate cultures.
M&A Culture Research
Cultural Integration: The "X Factor" in Merger Success and Failure
Organizations have grown far more sophisticated and skilled in their ability to execute the integration process. The one area where companies still struggle, though, is in merging disparate cultures. This is the black box of integration, the most complex problem that executives encounter in M&A ...
M&A Culture Presentations
How to Perform Culture M&A Due Diligence
41-slide PowerPoint presentation on how to perform culture M&A due diligence.
How to Perform Culture M&A Due Diligence: The 5 Stages
- Understanding the Deal Logic
- Getting Organized
- Data Gathering Tools and Techniques
- Analyzing the Data
- Operationalizing the Data
Organizational Culture and Mergers: The Hard Facts
Hard Facts About Culture
- Strategy is a product of your view of the future.
- Culture is essentially the product of your history
- That will always present a challenge in ensuring that the corporate culture is aligned with and supports your plans for tomorrow.
- VERY FEW culture characteristics wield a make-or-break influence over operating results and an organization’s future …
Culture Integration in Mergers & Acquisitions
- Merging Requires New Culture and Behaviors
- Closing the Gap
- Work Culture Implementation Schedule
- Work Culture Team Mission Statement
- Mission of Organizational Development
- Characteristics of An OD Function
- What Are We Doing
- Quote on Culture
- One Culture
- “Should Be” Work Culture Attributes
- Thanks To You Great Foundation to Build On
Post-Merger Integration Culture
Several Ways to Address Cultural Issues
Four Possible Scenarios for Culture Integration
Advantages to Each Approach
Why Are Post-Merger Cultural Issues Difficult to Manage
Consequences of Culture Conflict
Culture Differences Can Cause Integration Failure
3 Important Drivers of Cultural Issues
Components of Culture Change Programs
M&A Culture Articles
Most Companies Combine Cultural DNA Without a Strategy
How different a person would you be? If the change happened overnight, would you even recognize yourself the next morning? What would it feel like? How would you behave?
That’s what happens when, for example, a 4,000-person company acquires and integrates a 1,000-person firm ...
Rx for M&A Culture Integration
Nothing in the realm of M&A gets botched up so consistently as the blending of two companies’ corporate cultures ...
When Big Guys Buy Small Fries: The 10 Rules to Follow
The integration of a small, well-run company often requires a light touch strategy. In those situations, follow these 10 rules to achieve the best results: …
The Strategy-Culture Disconnection
There's an insidious threat facing organizations that is growing rapidly via M&A: A loss of alignment between corporate strategy and the existing culture.
If these two fall out of sync, you’ve got a real dilemma on your hands …
Merging Cultures After an Acquisition
Mergers very often are such a destabilizing event, and have such a powerful impact, that they “break the organizational box,” so to speak. Frequently there is a window of opportunity that develops during which management can do some very profound things in terms of reshaping the corporate culture …
Don't Try to Merge Two Cultures by Taking the Best of Each
The “best of both worlds” strategy for integrating cultures brings traumatic destabilization to both organizations ...
M&A Culture Due Diligence Assessments
M&A Due Diligence Cultural Assessment Results
Human Resources (HR)
Observations/Conclusions from the Data
- HR operates with minimal favorable impact on the operations or the culture of the organization.
- There is data that indicates a gap in the strategic and tactical elements of a representative high performing HR group.
- Specific areas of opportunity include:
- Performance management process and system
- Onboarding program
- Personnel development
Cultural Due Diligence Assessment
15 culture assessment questions to identify strengths, weaknesses, and wild cards.
- How do people feel about being merged/acquired?
- What would be your (or others’) major concerns about being acquired or merged?
- What are the defining characteristics of your company? (What’s distinctive? What differentiates you from other organizations in general? From the competition?)
- Describe the company’s core values. (What does it believe in?)
- What do outsiders not know/realize about this company?
- What are its idiosyncrasies?
- What are the unwritten rules around here?
- What aspects of the culture are most important to people here? (What do they hold sacred?)
- Where in the organization do the dominant subcultures exist?
- What are the company’s negative or undesirable cultural attributes? (What aspects of the culture need to change? ...
Cultural Due Diligence Interview Results
1. How do people feel about being merged/acquired?
The corporate perspective is different from the field’s perspective. Here at headquarters the questions are, “Is there room at the inn?” and “Will I go to Atlanta?” In the field, people are wondering if they will have to work for less money. Some are angry that it came to this. Did the CEO and the SVP just sell us out? People’s emotions run the gamut from “How could you do this?” to “What took you so long?”
It’s no shock that we merged, but people are set back on their heels that it is this acquirer...
Operating Style Analysis (Part I)
- What aspects of the way your organization operates contribute most to its success/effectiveness?
- What characteristics of the way your company operates most hamper or interfere with its ability to compete?
- List the company’s operating strengths. (What does it do best?)
- What would you identify as the company’s operating weaknesses? (Where is the company most vulnerable or least effective?) ...
Operating Style Analysis (Part II)
1. Spending Habits: Frugal or Free Spending
Comments regarding this issue: __________________________________________
2. Decision-Making Process: Deliberate or Expeditious
Comments regarding this issue: __________________________________________
3. Power and Authority ...
M&A Culture Assessment
Listed below are a number of cultural dimensions and indices that are organized across a continuum.
Step 1: Review each cultural characteristic and place an A in the column that most closely represents your perception of the Acquirer’s culture.
Step 2: Place B in the column that most closely represents the Acquired Company’s current culture.
Step 3: Calculate the absolute difference between each rating to determine the largest culture gaps ...
M&A Culture Handbooks
High Velocity Culture Change
High-Velocity Culture Change delivers 22 specific guidelines on how to manage your part of the organization for high-velocity culture change. You’ll also learn how to avoid the management traps that cause most efforts to fail.
This handbook will prepare you for the rigors of the agonizing process that is called culture change. It will also prove how and why the pain is well worth the cost. Learn to:
- Achieve dramatic culture shifts in record time
- Put the day-to-day responsibility for culture change where it belongs
- Generate broad support for the culture change effort
The Employee Handbook for Shaping Corporate Culture
Shaping Corporate Culture tells you what to expect, why things happen, and how to meet the challenges of culture change.
This handbook delivers a crucial all-employee message on the “how-to’s” of culture integration and change while distributing accountability for the change effort throughout the organization.
Used in conjunction with the complete 95-5 Methodology or as a stand-alone tool, this handbook will help your entire workforce focus on the 5% of culture issues that are mission-critical.
Ground rules include:
- Accept personal accountability for culture change
- Protect the organization’s operating results
- Push for speed in the change process
- Don’t be surprised when culture counterattacks
Our rapidly changing world calls for a culture with quicker reflexes. More Speed. Agility and flexibility. The future requires a shift to new responses. It's time to change the way we handle change.
Culture Shift provides an entirely new mindset for your staff, quickly transforming behavior through the entire organization to create a more flexible, adaptable culture.
This eye-opening message instructs your people to “stop doing what comes naturally,” and “do what works.” The 16 compelling guidelines offer a clear blueprint for creating a culture that thrives on change.
Some examples include:
- Stay Cool
- Take the Initiative
- Get Going
- Try Easier
- Take More Risks