mergers and acquisitions – the cultural challenge

Executive Summary

1.     There has been a phenomenal growth in merger and acquisition (M&A) activity over recent years and this shows no signs of abating.

2.     Despite this growth, research finds that a significant percentage of M&As fail to deliver the expected business benefits.

3.     Failure, the research finds, is rarely due to price or faulty strategies, but rather to cultural issues.

4.     Chief executive officers have a crucial role is creating a winning culture within unified organizations.

5.     Shaping a new corporate vision can play an important role as it gives employees at all levels something tangible to work towards that is unique to the new organization.

6.     Senior managers must be careful not to create a 'victor and vanquished' mentality within the new organization. This is a particular problem following a hostile take-over

7.     A process of cultural due diligence will go a long way to identifying potential cultural misalignment between organizations.

8.     Merger Integration Teams should focus on integrating cultural attributes as well as physical systems.

9.     Unifying human resource mechanisms can prove a difficult area in the integration process, especially around the area of compensation and benefits.

10.   Internal communication, the research shows, plays a pivotal role in successfully melding cultures. Communication should be honest, direct and timely, and companies should not shy from communicating bad news as quickly as possible.

11.   The experiences of acquisition exemplar GE Capital provide powerful learning points for other organizations.

12.   A case study on Lehigh Portland Cement Company demonstrates best practice.

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