Mergers and Acquisitions

Research suggests that between 60-80% of mergers fail to live up to initial expectations.  There are several key reasons for this and one of the biggest reasons is the failure of the leadership of the new company to integrate the two distinct cultures to create one organisation.  So what is a culture?  Simply, it is the expression of the beliefs, values, and behaviours of the people in the business.  Because it drives so much of what happens within a business, it is the single biggest factor that differentiates one organisation from another.

Whilst financial considerations can determine if a deal is desirable, it is the cultural considerations that determine if the merger will actually work.  The failed Daimler Chrysler merger is one of the best examples of a reasonable financial fit being overwhelmed by fundamental cultural and values differences. 

 

 

Cultural aspects are often left to HR to tackle, which would be fine if the board recognised that cultural fit and not balance sheet compatibility is the key to a successful merger. So if HR had the necessary authority to make essential people changes and if the board were willing to take guidance from HR on how they need to behave to create a single culture, this could work extremely well.  Sadly, culture is often seen as a “nice to have” and cultural work is often “bolted-on” to the “real” focus of financial, physical and systems integration. 

One of the biggest problems of understanding and shaping culture is that it is literally everywhere. It is essentially the environment around us.  Subsequently, it can be extremely difficult to grasp and describe, especially for those who live in it.  When looking at different organisations, it is possible to see and feel the differences, but it’s much harder to pinpoint precisely why one company is different to another and what the leaders can do to ensure the effective creation of a new business.

If you run an organization that has recently acquired or merged with another, to what extent have the old cultures evolved into a new identity?  How successful were you in honouring the best of both cultures (regardless of who was buying whom)?  How did you tackle the values differences that generated sometimes conflicting behaviors among employees?  If you are preparing to buy another business, what thought have you given to the challenges of integrating the two cultures?  Where are the opportunities, the complementary values and the potential flash points of the new organisation?  What are you doing to anticipate and manage differences?

The CTT from the Barrett Values Centre is a tool that will enable us to identify the cultural differences and similarities.  This knowledge will enable your leadership team to shape the two cultures increasing the probability of a successful merger.  The Merger and Acquistion Report will give you a valuable snapshot of the two cultures.  Armed with this information, we can work together to assist you in your quest to build a sustainable culture to increase mission-assurance.

 

 

 

 

 

Conflicting Cultures?

 

60-80% of mergers fail

to live up to expectations.