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.
