Reply To: M&A Integration: Culture

#114613

cjohnson
Participant

I can give a vivid example from my experience. Our company acquired a company (NewCo) that was in an adjacent geography. Our markets overlapped slightly and as a result we considered ourselves competitors. NewCo had 4 locations, each managed by a different partner.

At the time, our integration process was immature and mostly focused on the hard success factors. We felt we were the leading company in our industry and that the employees from NewCo would be happy to join. We did not have cultural assessment tools or a good understanding of how soft success factors can impact an acquisition.

One Day 1, one of our senior managers arrived at one of the NewCo locations and was greeted by a group of employees that had covered their uniform name tags with a piece of tape with a number written on it. This signified that they felt they had been acquired by a heartless large company that would treat them as a number, not as a person. This was our first clue that cultural integration would be a challenge. What we did not realize was:
1) As former competitors, NewCo had created a negative image of our company. The employees did not want to accept their company had been acquired by the “enemy”.
2) Each location had a different culture because the 4 partners operated independently from each other. We thought we were buying one company with one culture when in fact we were buying one company with 4 cultures. The employees from each location did not even like each other. This created another layer of complexity for the cultural integration.

These challenges were definitely detrimental to the success of our acquisition. Ultimately, we succeeded in generating the targeted value, but this was delayed at least 2 years until we addressed the soft success factors.

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