Reply To: What is the best way & best time to do a cultural assessment in M&A?


Cultural assessment should be done at several stages. The earliest stage of looking for a company to engage in talks with should include some high-level understanding about culture. Won’t be very deep, won’t be very accurate, but there is enough out there to get a feel for it. Then, as you move into due diligence, human capital due diligence should take a deep dive into the culture – everything from past engagement surveys to current interviews of existing employees, review of recruitment notes of recently interviewed candidates (whether hired or rejected) to understanding of the reporting structure, how decisions are made, level of collaboration vs. independence, and much more. All should be uncovered and revealed during this phase. Unfortunately, such a deep dive is rarely done and therefore too little is known prior to deal execution. When PMI occurs, there tends to be a lot of surprises, and too often those surprises lead to deal failure within 1-3 years post-close.

If a solid cultural assessment is done, then prior to deal close, a plan can be developed to integrate the cultures with milestones aligned with the new merged entities strategic plan. When this is done well, then PMI runs much more smoothly. RIFs of the right people can be completed quickly in minimal waves (ideally only one, but rarely in larger headcount transactions does that get to happen) while the key talent is appropriately retained. Total Rewards programs, systems integrations, and organizational shuffle will happen with clear lines of communication and stronger buy-in.

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