M&A and Culture's Role

Yes HR is locked out in most cases; please see previous article and comments on M&A. However, my experience is that culture is a critical element as is the process of the M&A. Who remains and who goes, how they go, and then the cultural match between the businesses being merged. In a situation I was in, we decided not to merge the two businesses (because they were so different in many areas such as their operational working) and leave them to operate separately for 3 years to allow the evolution of the culture and values towards ours (the acquirer). In another it was a merger which looked like a takeover, and besides obvious cultural differences which were ignored repeatedly, leaded to key talent loss and with this some critical clients/customers losses. Culture does not need to fit perfectly; it needs to be understood in line with the market and the customers the business will continue to serve. It is also critically important on how decisions are made, the level of transparency, and the speed in which things are done. A mismatch here leads to mistrust (already high in an M&A situation) especially if not addressed proactively and with sensitivity. Add to this cross boarder M&A and you have added to the complexity and the chance of failure. Take USA and Indian mergers, or German and Chinese, or Swiss and Japanese, Spanish and UK. They need to have specialists briefing the players on cultural issues of a national nature and of a company nature, and then analyzing meetings for behaviors and misread meaning to ensure that they are not repeated and both sides learn as they move forward and so build a degree of trust and understanding of each other. A real danger is the arrogance that so often accompanies M&A deals and negotiations which end up very much as an “us vs. them”. The avoidance of these alone would close the gap in a significant way at least at the top. This needs to be translated into the respective business units and staff and needs time to be communicated and then understood and accepted or at least tolerated if costly problems are to be avoided.