Pursuing a Merger Or Acquisition? Culture Can Trip You Up
“I have an existential map,” a comedian said. “It has ‘You are here’ written all over it.”
Joking aside, that’s exactly what every good change agent needs: a map that shows not only where you’ve been and where you’re going, but keeps you well grounded in the here and now.
This need is especially relevant in the merger and acquisition world. As any good M&A operative will tell you, organizational culture eats strategy for breakfast.
Years ago, one of my clients (a global engineering firm) was at the eleventh hour of acquiring a British company. All the lawyers and accountants were happy with the deal. Then, almost as an after thought, the acquiring CEO asked me to take a look. Time was short and the budget was small, so I confined my examination to interviewing and conducting 360-degree performance profiles on all the key people in the target company. When I reported to the board of the acquiring firm I used only one graphic. It compared the acquiring firm’s high-trust, collaborative performance culture with what I found to be the target company’s low-trust culture of Machiavellian turf battles. Then I asked a single question: “Do you really want this behavioral DNA to be introduced into your company’s cultural gene pool?”
The board immediately nixed the deal.
Culture really does matter. And smart M&A professionals give it the attention it deserves. One of those is Steve Sapletal, a director in the Minneapolis office of West Monroe Partners, a leading player in the M&A business. His views on this subject are worth a hard look.
Rodger Dean Duncan:
Why do so many otherwise smart business leaders seem to ignore or discount the importance of the “people stuff” when planning a merger or acquisition?
They simply don’t know how to effectively deal with issues of culture and change management. These areas require the right resources, processes and tools to plan and implement the required changes as well as measure results. Leadership and boards typically don’t hold the M&A accountable for the softer-side of the transaction.The concentration is often only on the financial success of the deal and the items that can be [more easily] measured.