November 3, 2018 at 11:32 pm #70888
Hi I am curious to hear about cultural DD issues you may have experienced. Also, interested in how you may have dealt with different languages between companies.February 4, 2019 at 1:51 am #76974
I’m currently dealing with financing from Asia, a European principal, and South American targets. The language barrier can be very difficult, because although we all speak English, there are many words or phrases that can be interpreted in various ways. This has caused many issues during meetings, so we now do everything over email to provide a clear paper trail as to who said what and how. This makes it easier to go back to a conversation and clarify something rather than leaving important issues left up to interpretation.
The cultural issues have also been difficult at times. Understanding that not everything will be done “your way” is key. When that alone didn’t work, we set up compliance guidelines delineating what was expected and the format. Doing that seemed to take forever but it did clear up a lot of issues because the work product was uniform and no longer based on “what’s good enough in my country”.April 7, 2019 at 5:04 pm #82665
I agree to what was explained by Fernando, and I would add also the openness and transparency level in communication from one country to another even these companies are running in the same region.April 9, 2019 at 9:22 pm #82816
I’ve definitely experienced cultural due diligence issues, particularly with human resource and legal matters, especially in cross-border acquisitions involving Latin American targets. The language and cultural barrier also presents difficulty in getting and interpreting information provided. I’ve found that having local advisors can go a long way to alleviating these issues -they can handle the language issue and explain to us cultural context for explain where things may be normal but low risk or to identify risks that we not be aware of due to cultural issues.June 25, 2019 at 6:22 pm #87129
I think language and mostly culture might represent a huge risk. My advise would be to rely on local advisors and consultants (experienced), in order to mitigate risk.August 3, 2019 at 8:01 am #92022
Josh Liang Wee OoiParticipant
The cultural part is very interesting, not withstanding communication but also in terms of getting the best information available. Documentary diligence aside, understanding more about the business, the elements that drive it and possible red flags in the business really comes from interaction and speaking with the people within a target. To understand both the national culture and the company culture is an integral part of the DD as it not only affects integration but also helps with being able to identify possible issues that may be present.August 3, 2019 at 2:06 pm #92041
Dr. Muhammad Iqbal ShaharomParticipant
Cultural issues DD can be easily solved by hiring interpreters that excel in the foreign language that you are facing. We have instances whereby companies from China invest in asean countries and the chinese company hired staffs that are excel in english. We also have japanese speaking expatriate speaking only japanese but all problems were solved by using an interpreter. In merger and acquisition buy out, your staffs must be able to speak the language use by your acquiring company that you want to purchase.October 22, 2019 at 10:03 am #97517
I agree with Gabriele, in that language and culture may pose challenges in a DD. In these instances, it is crucial to have the appropriate advisers in country, with a liaison and co-coordinator in your jurisdiction, to facilitate the process and ensure a mutual understanding.June 4, 2020 at 6:30 pm #110591
I agree that cultural differences can cause wrinkles in the DD process. However, a way to mitigate these differences is by having an open line of communication and a clear common goal. Also, having designated leaders within the different regions that can make sure that message is being spread in a digestible manner.July 1, 2020 at 7:13 am #111967
Interesting discussion on culture and cross border DD.
Also wondering if these culture differences have been a major roadblock or even derail any of your deals?
Would the executives take culture matters (if they found corporate culture incompatibility or challenges between the two organizations) and decide to call-off the deal despite good economics?
Keen to hear your experiences too.August 9, 2020 at 5:06 pm #112546
I definitely made the mistake of not paying enough attention to the differences in Swiss and German culture in my work life. I worked for years in Germany and then joined a Swiss company. Same language but much different cultures. I like them both, but failed to think enough about the differences as I transitioned from working in one to the other.
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