CULTURE IS CENTRAL TO M&A SUCCESS

The success of any mergers and acquisitions ultimately depends on effective cultural integration. According to a survey by Deloitte, 63% of executives say culture issues were the main cause for a deal’s failure. Additionally, research by SHRM shows that 83% of mergers fail to meet financial expectations, often because culture issues are overlooked. But another study by KPMG finds that deals are 2.2x more likely to be successful when cultural integration is prioritized. The data underscores how critical it is for leaders to manage the cultural dynamics of M&A.

Without proper management of the human dynamics, companies risk disillusioned employees, lack of alignment, turf wars, talent losses, and an inability to capture expected synergies. However, with intentional culture management, leaders can ensure shared purpose, cross-organizational collaboration, and engagement in the new combined entity.

 So what needs to be done to set up integration success?

• Assess cultural alignment early: Conduct cultural analysis at the earliest opportunity - even before official discussions if possible to surface potential friction points or misalignment.

• Define shared purpose and values: Work across leadership teams to agree on the vision, mission, values and behaviors that will shape the integrated company.

• Encourage open dialogue: Create opportunities for two-way discussion between leadership and employees at all levels so concerns can be voiced and addressed.

• Deploy dedicated integration teams: Task force(s) should be chartered with supporting the cultural transition specifically.

• Anticipate friction points: Identify where subcultures or norms may clash, and proactively address to minimize dysfunction.

• Communicate, communicate, communicate: Overcommunication reduces anxiety amidst uncertainty.

• Celebrate heritage: Balance integrating cultures with upholding the best of both organizations’ histories.

• Train on culture: Equip people managers with tools and training to hold their teams together through turbulence.

• Walk the talk: Leadership behavior must model the desired culture consistently.

With diligent culture management, companies undergoing M&A can thrive. An intentional people-focused approach enables realization of the hard and soft synergies that drive merger and acquisition success. When properly executed, culture integration allows deals to generate maximum strategic value.