[LER SER YENG]

How do you decide which type of cultural integration is suitable for the merger? When you are running your cultural DD, what degree of cultural differences is deemed acceptable for the deal to move forward?

[Aleksandar]

Hi Ler
I would here reference to the materials studied:
Preservation involves retaining the distinct culture of the acquired entity, particularly when it holds strategic value or uniqueness, such as in cases of niche innovation or a strong brand identity. In contrast, Absorption focuses on fully assimilating the acquired organization’s culture into the parent company, often necessary when alignment with the parent’s operating model is critical. A middle-ground approach is Symbiosis, which blends the best elements of both cultures to create a “best of both worlds” model—an especially effective strategy in mergers of equals where mutual respect and collaboration are key. Finally, Transformation involves reinventing the culture entirely, a route typically chosen when both organizations recognize the need for a fresh start due to significant cultural incompatibility or a shared aspiration for change.

The strategy for cultural integration can generally be categorized into four distinct approaches, each tailored to the desired level of integration. First you may want to ask yourself following questions:
What is the primary rationale for the merger or acquisition?
Is the leadership team aligned on the importance of cultural integration, and do they support the desired end-state vision? (Begin with the end in mind)
What are the core values and mission of each organization?
Would the full integration of the target company destroy value, because the distinctive culture and management drives innovation of the target company?

[Author]

Posts