[Cody Eberhardt]

During M&A, how impactful is culture on the success or failure? Can a company that has very little in common culturally still have a successful integration? Is the amount of work that would likely need to take place worth the potentially upside of the integration?

[Daniel Nur Hakim Ismail]

Culture is a crucial factor in M&A success or failure. Companies with different cultures can still have a successful integration, but it can be challenging. The investment in understanding and aligning cultures is worth it, as a strong cultural fit can enhance M&A success, retain key employees and customers, improve operational efficiency, and increase profitability.

[Jacob Jian Feng Jarabejo]

Culture plays a critical role in the success or failure of M&A integration. The cultural differences between two organizations can lead to challenges in aligning processes, systems, and values. The lack of cultural alignment can cause employee disengagement, resistance to change, and an overall lack of cohesion within the merged organisation. These issues can negatively impact the business’s financial performance and the long-term success of the M&A transaction.

For example, if a company has a more formal and hierarchical culture, and the acquiring company has a more informal and collaborative culture, this difference in management style can cause confusion and lead to conflict among employees. Similarly, if a company values speed and agility while the acquiring company emphasizes quality and long-term planning, there could be clashes in how work is prioritized and executed.

[Nathan Komorowski]

I have seen where culture plays a large role in the M&A integration. The area that has been a miss is understanding the way the incoming organization handles communication to its employees. If they are a very close, get together and talk through every new item type of organization, that makes it difficult for them to merge into a company that is more hands off and has their employees self service as much as possible. This will lead to the new employees missing information as they are not use to the communication style and can lead to higher flight risk of that employee base.

[Pamala Paschal-Sturhan]

Culture from an organization perspective and culture from a foreign country perspective can highly impact PMI and the long-term success of an M&A activity. Imagine working for a company that has been acquired by a business that does not have the same kind of culture your business has or even more challenging, by a business from a foreign country. When M&As have had only a marginal 50% success rate, it becomes more apparent that understanding the similarities and differences between the target company and your own as a buyer is extremely important.

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