Fool-Proof Your Merger

How to
Your Next Merger

Planning and executing successful mergers can feel like a bit of a gamble.

Whether you define “success” by shareholder value, customer satisfaction, or some other measure, most research estimates the merger failure rate to be somewhere between 50–80%. Those aren’t great odds for your next merger, but don’t worry—there’s hope. You can boost your chances for success by working to mesh together the organizational cultures of each merging company.

Why look at culture?

When a company is acquired, the decision is typically based on product or market synergies. Yet cultural similarities (or differences) shouldn’t be ignored. Sometimes mergers fail because the organizational cultures of two previously independent companies don’t work well together after the merger.

We can learn from these failed mergers by taking ownership of merging organizational cultures, rather than leave it (and the merger’s success) to chance. By doing cultural due diligence, you can determine the right path for fool-proofing a merger and meshing distinct cultures.

How to beat the odds.

In its most basic form, cultural due diligence is a simple assessment. You ask individuals within a culture what is personally important to them, how they perceive their current culture, and what direction they would like their organization to take. (You do this for each company involved in the merger.)

Then, you compare the results from each culture. You see where they have similar points of view, where they differ, potential problem areas, current mutual strengths, and what one culture might offer the other.

Performing cultural due diligence can help ensure the success of compatible mergers and avoid the disappointment that could result from a well-intentioned but incompatible merger.

Cultural due diligence can be conducted with the same rigor and depth historically focused on financial, operating, and market data. Be sure to document your findings in an in-depth report and share with all concerned stakeholders. This report should clearly show the strengths of the merging organizations, the potential pitfalls, and any specific or actionable recommendations you have for maximizing the potential success of the planned merger. This will provide all stakeholders with hard data on the soft—but vital—issue of culture.

Going beyond integrated to energized.

After reviewing the information gathered during cultural due diligence, organizations can go beyond integrating their merging cultures and begin energizing them. During the discussions around your findings with stakeholders, brainstorm ways to help the newly merged organizations connect with their shared values and beliefs.

By exploring options for strengthening and energizing the integrated culture, you can maximize the potential of your fool-proofed merger to help the organization thrive in the long term.

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