Value & Best Practices for Cultural Diligence

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    Christine Barnum

    Upon working through the first module of the IM&A program, I was pleased to see mention of the value and importance of performing cultural due diligence when analyzing M&A targets. I fully agree with this thought, as I have had some rocky experiences following an acquisition largely due to culture clashes, but I am having a hard time defining or quantifying what some of the ways this would be completed and how you develop a playbook for completing cultural due diligence. I went through one M&A where on paper and strategically it did not make much difference to me – I felt pretty neutral about it – but upon meeting the team of target company, I had an “a ha” moment and the deal made sense. There wasn’t anything specific I could put my finger on, other than a general feeling of “wow, I’d really like to work with these people – they seem a lot like us, even though we’re nearly 6,000 miles apart!”. With technology and accounting due diligence, there is a tried and true methodology for working through the process, what to look for, etc. My question to all of you is: what do you consider to be the best practices of ensuring a good culture fit? In this sense, I mean the culture of the company and its employees, not necessarily the difference between countries or states, although that could very well have an impact.

    Gretchen Asher

    Great question Christine. I don’t have a hard & fast answer for you. But I do have some thoughts based on my experience:
    1. M&As are done for various reasons and “culture fit” is usually not at the top of the list. It’s usually more about the business offering fit than corporate culture even if the goal is to broaden services, new market penetration or acquire new tech, etc.
    2. I usually do quite a bit of work cascading through all levels of the organizations to identify cultural alignments and disconnects and then work with leaders to identify the culture they want for the combined entity and roll that out in the new entity. The identification and evaluation of best practices of each business need to be considered to adapt to new business processes as well.

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