Mercer Says That Clashing Corporate Culture Issues Can Stop Successful M&A Integrations

Bad corporate cultures can stop companies from reaching their full potential, something that people like Nadeem Shaikh Anthemis can attest to. However, even with good corporate culture, there are some problems that might still pop up.

According to HR consultancy firm, Mercer, mismatched corporate cultures can lead to less-than-stellar post-merger results, which includes failing to meet financial targets and delays in expected synergies. The firm sates that making sure that the company y is sold for a good price is a key part of the mergers and acquisitions process, but also ensuring well-aligned corporate culture is something that companies need to give equal priority to.

According to them and their survey, cultural misalignment for companies details M&A operations at notable rates. The report, dubbed ‘Mitigating Culture Risk to Drive Deal Value’, the report surveyed at least 1,400 M&A across 54 countries who were involved in 4,000 deals in the past three years.

According to the respondents, 30% of the mergers fail to meet financial targets, not because of bad plans, but because of cultural issues. 67%, meanwhile, reported delays in synergy thanks to mismatching cultures between companies involved in the transaction.

Culture is, simply put, how businesses operate, how they treat both customers and employees, and covers things like dress code, office setup, benefits, client satisfaction and employee turnover.

Mercer identified several key components based on their respondents:

  • How leaders behave (61%): referring to how often leaders act in accordance to what they say;
  • Governance (53%): the company’s structure, management roles, what’s accepted;
  • Communication style (46%): which can be friendly, infrequent, etc.;
  • Working environment (46%): the nature and feeling of the workplace.

Mercer says that culture is one of the greatest determinants of post-merger integration and success, thanks to how it defines the business and how it operates. That being said, it can be difficult to keep track of, as sellers are in control of the deal itself, can refuse to divulge key info, and other things that might not be conducive toward integration.

The report recommends that corporations and organizations recognize the dangers that come with cultural misalignment, and insist on ensuring cultural diligence in the transaction process, something that people can learn about reading works from Nadeem Shaikh Anthemis and the like. Firms should also be willing to walk away from deals, should cultures not mesh well together, as they are just as financially detrimental as traditionally-recognized ‘bad deals’.

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