Reply To: Reasons Mergers Fail – Culture

#37937
Gina Miele
Member

Though corporate culture is an under-ranked and under-evaluated portion of the due diligence process, I believe its evaluation is critical to a successful integration. Our first integration ended in 100% turnover due to the cultural differences being too great to work through. This difference was accentuated by our retention of the previous owner for the first year post-acquisition. Her presence only increased the divide between cultures, as she was resistant to the changes we attempted to implement. The site is now operating more successfully now that there are no legacy employees left, but the legacy customers are having a difficult time with the transition as well. Since this first acquisition, we have more heavily weighed corporate culture in our due diligence process and walked away from a few organizations due to insurmountable differences that would create costly clashes post-acquisition.

Since there will be cultural differences in every company that is acquired, I would suggest that these differences are handled by ensuring that the leadership teams are on the same page about the changes that will occur. Open communication surrounding the intentions for change, as well as full transparency of the structure of these changes, will be critical pieces of information to ensure that the acquiring company and the acquired company can both work towards a common goal. If the previous owner is retained, they can be a critical piece in the integration puzzle as long as they are working towards the goals of the newly merged organization.

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