Why do so many seemingly rock solid mergers end in failure? Did the figures simply not stack up or were identified synergies simply not there to be had. Perhaps the merger was a last ditch attempt to recapture the market which had already moved beyond reach or maybe what looked like a good fit turned out to be anything but.
Yes there are many reasons why mergers may not deliver as expected, but one of the key reasons is that the leadership didn’t take the time to carry out a proper cultural evaluation before going ahead. Why bother with cultural due diligence? Surely legal and financial and systems due diligence is all that is required? Well yes these three will deliver an understanding of the structure of the businesses but they won’t tell you anything about the likelihood of the businesses and their people gelling together.
Now I’ve heard the point of view that says that if you are acquiring another business it doesn’t really matter what their culture is because you’re going to impose your own on the new entity. And if you want to do that then go ahead; provided, that is, that you don’t mind key staff walking out early in the process taking all their knowledge and experience with them, and also provided that you don’t mind losing that quintessential something which made the acquired business attractive in the first place. Actually, that’s the best case scenario; because if there is that big a clash then you’re likely to also lose members of your own team and key customers in the fallout from the businesses colliding.
Gaining understanding through evaluation
So if you do take time to evaluate, to undertake a full and robust cultural due diligence exercise then what you likely to get out of it? Firstly, you’ll gain a better understanding of whether the businesses should even be looking at merging. If the signs are positive, then cultural due diligence will give you some key pointers about areas of approach and ethos which you will need to work on in order to make the merger succeed.
For example, one accounts department may be hierarchical and process driven with task strictly allocated to individuals whilst the other one operates on a more freewheeling basis in which individuals may work on a variety of projects depending on immediate need. Client mesh the two together and the only certain outcome is that chaos, misunderstanding and stuff disengagement will follow.
Building an understanding of how each department works and the cultural drivers behind that working pattern will help the organisation to draw up a picture of how it wishes the new combined department to operate and then put the training in place in order to help people to assimilate the new working pattern. This may include providing training in skills such as collaboration and communication, negotiation and compromise and in building understanding and team working.
Mergers and acquisitions can be productive and result in positive outcome for the new entity, people and its customers. Taking time at the outset to evaluate the culture is one key way of ensuring that success will follow.
Formerly a customer service leader within financial services, Derek Bishop has over twenty years’ experience of leading people and delivering business results in high volume and complex environments.
As an expert on culture change, leadership development and customer experience he is considered one of the leading thinkers on creating...