23 Sep A Culture-First Approach to Mergers & Acquisitions

Since late 2020, there have been record levels of mergers and acquisitions, in both volume and value. This continued trend is no doubt a result of the global pandemic, which forced executives across all industries to reassess their business strategies. While this recalibration has contributed to economic recovery, it’s also posed a challenge for those in the middle of each merger/acquisition.

95% of executives describe cultural fit as critical to the success of integration.

When it comes to mergers and acquisitions, cultural alignment is the secret to success. 95% of executives describe cultural fit as critical to the success of integration. Even with that seemingly commonplace understanding, “studies consistently show that most mergers and acquisitions fail, mainly because of people and culture issues.” It’s apparent that cultural alignment is a challenge that tends to be underestimated. Here are some ways in which you can navigate M&A integration more mindfully. 

Conduct a Culture Assessment 

Only then can you take the best parts of each culture and intentionally combine them into a winning union.

• Take a long hard look at the existing culture and strategy within both organizations involved. What works, and what doesn’t? Where is there overlap? The old adage of “don’t fit a square peg into a round hole” comes into play here. If your culture and values are far apart, it doesn’t matter how great the accretion looks on paper. People will leave, and the value you placed on the company you purchased won’t come to fruition.  

• While your cultures won’t match up exactly, there should be overlap in key areas. Only then can you take the best parts of each culture and intentionally combine them into a winning union. In order to do that, you need to have an in-depth understanding of the current state of both individual cultures. And, you need to have a clear picture of your aspirational culture. 

• It’s just as important to recognize and learn from the weaknesses found in both parties as it is to pinpoint the strengths. 

Define Your Plan 

The more concrete you are with this step, the more solid the execution will be.

• Without a plan, things can easily get messy. Try to think ahead in terms of people, strategy, and culture. Don’t forget to consider the data when creating your plan. 

• After conducting a thorough assessment, you can define the new mission, vision, and values, and figure out how that will be best realized. Lay out a list of goals, and organize them in order of priority. The more concrete you are with this step, the more solid the execution will be.  

• Share the plan with your employees. Outline the new strategy clearly, and point out the changes that will be made on each level of the organization. What are everyone’s new role and responsibilities? What do managers need to do in order to uphold the new culture? How do employees need to change their work systems and behaviors? Managing expectations and setting a definitive path to success will empower your team to do their part in supporting the change. 

Focus on the People 

By understanding the way your employees feel, you can have a better idea of how to effectively manage the situation. 

• At the heart of an organization is its people. There’s no doubt that such a massive upheaval will disrupt the balance. Having compassion for all employees (those staying and those going) is the only way to help them adjust to upcoming changes. By understanding the way your employees feel, you can have a better idea of how to effectively manage the situation. 

• Make sure you provide the necessary support and guidance to help restore the flow of things. Consider providing weekly updates, one-on-one check-ins, and anonymous feedback surveys. Training sessions are also a good idea if there’s been a significant change in roles/responsibilities. Plus, leadership training is helpful in guiding managers on how to lead the transition. Ultimately, the success of the merger/acquisition is dependent upon the employees involved adapting to the new culture, so don’t skimp on providing a people-support budget. 
• Be transparent and straightforward from the get-go. Not only do the employees deserve to be kept in the loop, but the entire organization benefits from being on the same page. The less ambiguity there is, the faster people can begin to adapt and align with the new strategy. 
• Facilitate connections between people from each organization. While you want to do social events like COVID-appropriate company-wide happy hours or smaller get to know you group sessions, also consider connecting exectutives and leaders to meet with the other firm’s employees. Encourage mentoring and sponsorships across company lines as well.  Create cross-company and cross-functional teams to help you solve some of the culture dynamics.  

Job turnover in companies with rich company cultures can be 3x lower than those without.

By focusing on culture alignment, you can increase the odds of success in your merger/acquisition. Job turnover in companies with rich company cultures can be 3x lower than those without. Plus, 58% of job seekers in the U.S. indicated that company culture was more important than salary.  
Culture Design and Change is one of The Silverene Group’s specialties. Our expert team is trained in the above steps, and more. We can help you navigate change, and design reinforcing practices to ensure your organization stays on track. Or, if you just want a bit of help on the side, we also offer retainer-based consulting. Head to our website to learn more about the ways we tackle Culture Design and Change, or schedule a complimentary consultation if you’re interested in getting specific. 

Shaara Roman is founder and CEO of The Silverene Group, a culture consultancy that helps companies align their people programs with business goals.