The business activity of a Merger and Acquisition M&A may be likened to a
marriage. Couples need to fully understand each other before they commit to marriage and ensure some success in their life together. Statistics have shown that top issues due to which most marriages fail include
incompatible personalities or financial hardships.
It takes respect, effective communication, as well as a
common set of goals to build and sustain a future
together. Isn't MM much like that? Not surprisingly,
in a Survey of Forbes 500 companies. CFOs assessed
`incompatible cultures' as the top challenge in achieving
synergies
The challenge and success factors for achieving
deal value in M&A transactions are largely aligned and
consistent as below
1. Effective due diligence to ensure that the risks,constraints and liabilities in the business are understood
2. M&A readiness
3. selection of the top team
4. Effective leadership from top team
5. A well executed employee communication programme
6. Integrating pay, rewards and benefits
7. Change management, and
8. Cultural alignment
In all these factors, cultural alignment is rated as the most challenging people issue. Towers Watson's recent studies also indicated that clashes between
disparate corporate cultures can be a barrier to successful post merger integration. It was found that even though strategic and financial aspects of a deal are taken into account, socio cultural aspects can result in acute inter organizational conflicts and mismatches between HR and managerial policies and practices.
What defines the cqlture of an organization? It could be taken as the sum total of the following six aspects:
L Leadership
2. Mission, objectives, values and strategies
3. Organizational structure
4. Brand promise
5. Programmes, policies, practices and a Work environment including national culture Unmistakably, the culture of an organization manifests into customer experience, shareholder value and business results. In a cross country deal, the organizational culture of the buyer and seller could be astonishingly divergent on fundamental and strategic counts.
From India, Indore
183marriage. Couples need to fully understand each other before they commit to marriage and ensure some success in their life together. Statistics have shown that top issues due to which most marriages fail include
incompatible personalities or financial hardships.
It takes respect, effective communication, as well as a
common set of goals to build and sustain a future
together. Isn't MM much like that? Not surprisingly,
in a Survey of Forbes 500 companies. CFOs assessed
`incompatible cultures' as the top challenge in achieving
synergies
The challenge and success factors for achieving
deal value in M&A transactions are largely aligned and
consistent as below
1. Effective due diligence to ensure that the risks,constraints and liabilities in the business are understood
2. M&A readiness
3. selection of the top team
4. Effective leadership from top team
5. A well executed employee communication programme
6. Integrating pay, rewards and benefits
7. Change management, and
8. Cultural alignment
In all these factors, cultural alignment is rated as the most challenging people issue. Towers Watson's recent studies also indicated that clashes between
disparate corporate cultures can be a barrier to successful post merger integration. It was found that even though strategic and financial aspects of a deal are taken into account, socio cultural aspects can result in acute inter organizational conflicts and mismatches between HR and managerial policies and practices.
What defines the cqlture of an organization? It could be taken as the sum total of the following six aspects:
L Leadership
2. Mission, objectives, values and strategies
3. Organizational structure
4. Brand promise
5. Programmes, policies, practices and a Work environment including national culture Unmistakably, the culture of an organization manifests into customer experience, shareholder value and business results. In a cross country deal, the organizational culture of the buyer and seller could be astonishingly divergent on fundamental and strategic counts.
From India, Indore
How to harness culture to promote an effective integration
Culture usually is a soft concept; it is a set of implicit influences that people cannot account for completely or
accurately. Premerger due diligence will ferret out things that are measurable, with an emphasis on financial data.
Culture surveys and assessment tools can be used to measure culture, but these can be time consuming to
complete, and the heat of deal-making usually precludes the luxury of an extended effort to assess soft variables. Even if a culture assessment is performed during due diligence, it is difficult to imagine a joint venture or merger being called off because due diligence revealed that the cultures of the two legacy companies were incompatible.
Given that culture will seldom stop a proposed transaction, it becomes the responsibility of the people managing
the deal to stop culture from undermining their desired goals.
The most widely used approach to managing the cultural issues is to define a set of desirable cultural
attributes (a typical set being: customer-focused, innovative, entrepreneurial, decisive, team-oriented, respectful of
others) and then to exhort employees to adopt these attributes in their daily behavior. Companies are replete
with posters, screen savers, coffee mugs, and mouse pads that remind employees of desirable attributes. This method
is not supported by many "success" stories. The attributes are usually generic and employees struggle to bridge the
gap between broad principles that are easy to agree with and the specific, culture-driven ways that things get done in
companies.
From India, Indore
Culture usually is a soft concept; it is a set of implicit influences that people cannot account for completely or
accurately. Premerger due diligence will ferret out things that are measurable, with an emphasis on financial data.
Culture surveys and assessment tools can be used to measure culture, but these can be time consuming to
complete, and the heat of deal-making usually precludes the luxury of an extended effort to assess soft variables. Even if a culture assessment is performed during due diligence, it is difficult to imagine a joint venture or merger being called off because due diligence revealed that the cultures of the two legacy companies were incompatible.
Given that culture will seldom stop a proposed transaction, it becomes the responsibility of the people managing
the deal to stop culture from undermining their desired goals.
The most widely used approach to managing the cultural issues is to define a set of desirable cultural
attributes (a typical set being: customer-focused, innovative, entrepreneurial, decisive, team-oriented, respectful of
others) and then to exhort employees to adopt these attributes in their daily behavior. Companies are replete
with posters, screen savers, coffee mugs, and mouse pads that remind employees of desirable attributes. This method
is not supported by many "success" stories. The attributes are usually generic and employees struggle to bridge the
gap between broad principles that are easy to agree with and the specific, culture-driven ways that things get done in
companies.
From India, Indore
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Post Merger & Acquisition Cultural Compatibility Assessment Techniques.pdf