High M&A Activity
Mergers and acquisitions are at an all time high, with $4.7 trillion of global deals signed last year according to a recent M&A report by KMPG.
And although the payoff of a successful M&A is great, these are high risk deals. It’s not just about the financial gains. Reputations are on the line. Stakeholders observe nervously. And in order to ensure the expected return on investment is delivered, a great deal of planning around integrating company culture must go into the preparation.
Cultural Integration Issues
After an acquisition, the merger is a difficult undertaking – and often controversial. Employees may feel confused or unsure about what the future holds. And uncertainty can undercut the upsides of the deal.
When there’s a lack of communication, an incongruent cultural fit, or a poor integration plan, many mergers fail to positively impact the business – not delivering on the expected ROI. In fact, research has shown that around 70% of M&A fail to deliver their anticipated benefits because of “cultural issues.”
Because most M&A have financial, operational, or positioning motivations as the driver, many organizations fail to recognize culture as an influence that can derail the deal. And neglecting how a merger will affect your people can lead to many problems down the road.
Integrating Company Cultures Is Key to the Success of Your M&A
1. Communicate Early and Often
When people on the inside feel as though they are left in the dark, they are unlikely to jump on board with change. Transparency is key here. When your people come along on the journey and see and understand the vision for the future, they are more likely to support the integration effort.
In order to ensure internal buy-in you need people to feel confident in the decision to merge companies. You also need them to feel secure in their job and valued in their position. You need employees on both sides of the merger to get on board with the change. Keeping everyone in the loop about the change ahead is an important first step.
2. Examine Cultural Differences
In order to establish common ground, you have to recognize and address gaps. Define each culture and map them next to each other. Where are they not aligned? Determining differences is key to figuring out what shifts need to be made and where you might run into problems. Be clear and direct about disparities so you can tackle them head on.
3. Define Your New Culture and Develop a Cultural Integration Plan
A company’s culture is made up of the values, beliefs, and behaviors that are shared among all people within your organization. Oftentimes, culture is something that is difficult to pin down and, as a result, leaders may steer away from clearly defining their culture.
However, it’s very important to define the culture you are trying to build. Leaders should be aligned and clear so they can clearly articulate the new organization’s aspiration for the future and then behave accordingly.
So it’s important to put in place the measures and incentives that will fuel the behaviors that will then drive your culture. Dedicate the resources needed to create tools for facilitating cultural integration, measurement, and management.
4. Celebrate Change
In the end, cultural integration is about both sides adapting and celebrating the new culture that is born from the merger. This is a time of coming together and taking the best that both organizations have to offer. It’s an opportunity for growth – to get aligned, adopt new thinking, strengthen your culture, and move your business forward.
It’s a Process and Brand Strategy Can Help
Oftentimes, M&As require an investment in brand strategy to really ensure the expected ROI is delivered by employees. Don’t expect the cultural integration to happen over night.
Dedicating the time and resources to developing and articulating your new brand will help enable both cultures to understand the opportunities of the merger. And creating a newly developed employer brand after a merger will help everyone get on board and aligned with the new brand and the future of an integrated culture.
With the right investment and focus on employees and culture, all employees will meaningfully embrace the changes required during the merger and, as a result, your business will thrive moving forward.
Emotive Brand is a San Francisco brand strategy and design agency.
