March 16, 2021 at 4:56 pm #118244
What have you seen as the biggest negative impact of culture mismatch between target and acquirer?March 28, 2021 at 6:38 pm #118509
Until I started working with M&A integration, I did not fully understand the importance of culture in good business. I now completely understand just how important culture is because I have seen a lack of merged culture tear apart a few integration efforts. In the end, everything comes down to the fact that integrations are the joining of groups of people. Whether you are trying to integrate finance functions, HR functions, or any other function, the joining together of people to make this integration is what delivers results. If people do not merge to see that they share a culture and are working together to mutually benefit I that shared culture, they will not work to make it happen.March 28, 2021 at 9:42 pm #118515
The biggest negative impact of culture mismatch is the loss of key talent or key people. The industry of home health is a people business and the loss of a nurse, a patient, a sales person, or a VP could have serious negative consequences to the business you might have just acquired. People tend to follow the culture and the people they have formed bonds with in the home health industry and because the industry is so saturated, there are a lot of different companies for key talent to go to.March 29, 2021 at 9:55 pm #118545
People will only be happy with a culture that reflects their personal values. Some people thrive in dog-eat-doc culture. Some can’t do it at all. If the buyer culture is burn and churn and the target is high employee retention it will not end well.March 29, 2021 at 10:36 pm #118549
The most important key to successful mergers and Acquisition is the integration of two companies. Two companies can be merged and can operate efficiently if the culture of both companies is similar. The employment benefits, policies, HR, management, diversity, etc should be alike for successful integration. More efforts will go into the integration of the companies and instead of creating synergies, it will be a burden for management. One of the example is in our case study of Air India. In past, so many de-merger have happened because of failed integration of companies and the major reason was cultural barriers. However, if two companies merge and possess different cultures they should operate independently with minimal integration points like Facebook and Instagram.April 19, 2021 at 2:16 am #119265
One large factor to a successful M&A is culture fit. There are so many moving parts to worry about in a deal, and having a culture that fits closely together make the transition and coming of 2 entities much easier.April 20, 2021 at 2:19 am #119282
I believe that culture mismatch can lead to non-effective communication at the beginning of the integration, which can transform your project much harder than expected.June 6, 2021 at 11:55 am #120253
Manuela van UlzenParticipant
If the culture feels right people can deliver their best.
When people are e.g. not used to fast decision making or are not empowered to work independently it will be quite a challenge for them. They will feel uncomfortable, unsure about the consequences, etc. Like this the engagement level will go do and so will the motivation and performance.June 7, 2021 at 8:28 pm #120277
Cultural mismatch can be a difficult thing to overcome, but as with all challenges, it is not impossible. The largest negative impact to cultural integration failure would likely be loss of employees, loss of customers, and eventually loss of the synergies and goals of the deal in the first place. Effective change management can overcome cultural challenges, if they are well planned for in a realistic manner. Not everyone will get on board if culture changes are significant, but with the right plan and attitude, shift is possible. I witnessed this in an integration of a large national for profit acquiring a regional non-for-profit, and saw first hand what worked and what did not. It definitely takes careful planning, patience, and strong, caring leadership to guide both organizations through this. Respect, caring, and honesty go a long way.June 19, 2021 at 8:23 pm #120634
The biggest negative impact of culture mismatch between target and acquirer would be employee disengagement and de-motivation. If employees feel there is a mismatch between their personal values and the new entity’s culture, their loyalty and drive to contribute to the organization’s success will be greatly diminished. Good staff morale is critical to the attainment of organizational goals and therefore the ultimate outcome of the M/A.June 20, 2021 at 3:32 am #120638
I can tell you that having been on the side as being acquired and having to lead the organization in my country to integrate with our new parent company, has been extremely difficult. While strategic portfolio and size synergies were obvious, it was incredible the number of challenges we face due to the very different “how get things done” cultures. It took years to eventually subside and a lot of talent churn as well.June 24, 2021 at 10:58 am #120712
People want to feel safe. They are more creative, productive, etc., when they feel safe and are more likely to feel safe in an environment that is, at the very least, consistent. Add the stress of an acquisition (or a pandemic) and an unsafe culture will crumble, leading to talent churn, loss of productivity, and maybe even sabotage (intentional or unintentional). As part of cultural due diligence, it may be important to ask employees on both sides of the deal how safe they feel. An acquirer may have to evaluate their own culture from the standpoint of “is our culture strong enough” to take this on. Likewise, if the employees in a target do not feel safe before they are acquired, or merged, it is highly unlikely they are going to feel safe during integration or after.June 26, 2021 at 4:16 pm #120756
Trisha Clarissa NatanaelParticipant
Culture is what makes or breaks the company. Cultural fit will bring out the best in employees and to contribute more to the company even post merger.June 30, 2021 at 8:45 am #120897
Culture mismatch will definitely create issues and problems. If the culture mismatch involve keys personnel and crucial operations, we definitely need to think twice before the merger and acquisition. However, if it involve non key personnel and non crucial operations, dont think it should be a crucial factor to determine the merger and acquisition. Issues arising from the difference in culture on non key personnel and non crucial operation can be mitigated via SOP and intense training. Only those survive from the SOP and after training shall remain to be retained.July 2, 2021 at 11:36 pm #120982
Even though companies recognise culture as a key factor in the M&A’s ultimate success, most of them fail to conduct cultural due diligence before they finalise the deal. One of the main causes, for deals not delivering value to their full potential post-merger, is failure to realise significant synergies.
Successful transactions require a holistic view of culture at an early stage, and a strong focus on people-related issues.
Research has found that 83% of M&A fail to create their intended value, with clashes between organisational cultures being one of the most frequently cited reasons for failure.
One of the main barriers to success for organisations is the collision of cultures and not knowing what to do about it.
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