Why do so many companies NOT see the value of Cultural Integration?
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Post Merger: I’ve seen so many companies acquire other companies and focus on the functional integration but they just don’t bother doing any work on the cultural integration piece. The assumption is that the target company will just adopt the culture of the acquiring company. Why is this the reality so much of the time? What have any of you done about getting the cultural integration on the radar of those leading the integration?
Like it or not, M&A deals are driven primarily by the financial metrics and if the numbers look attractive, there is an inclination to go ahead with the deal. The classic case in point is the merger of Daimler AG and Chrysler where the synergy benefits were never realized due to cultural mismatch. Culture must be a focus in efforts to integrate companies and this requires a mindset shift of the external advisors, management of target and parent companies. When left to itself, culture will often undermine value-creation.
I agree that money is usually the primary driver for M&A deals. When looking to see if a company will take cultural needs into consideration during M&A, I think how they handle their current business is a good barometer. If the acquiring company’s culture ignores the needs of their existing staff, it is safe to assume they’ll take that mentality into the M&A deals.
While I see that money is the driver for the M&A, I think there is more awareness now that to retain the value of the acquisition, culture needs to be considered. That said, there seems to be a lack of understanding of just what cultural integration is. I tend to see the assumption that a ‘check for fit’ means culture is taken care of – that if the two firms are a ‘fit’ the cultures’ are close enough’. I think more discussion on defining culture and ensuring the whole acquisition team agrees on the definition is a good first step.
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