Culture matters in M&A


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Global M&A perspective- Culture matters: Early-stage, non-invasive cultural due diligence takes off

Last updated: 28 October 2009

Overview

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What can leaders do in the early phases of an M&A transaction to ensure that organisation cultures work together as collaborators rather than as competitors?

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An interesting development in our recent work is the increasing number of early-stage cultural due diligence assignments we are undertaking for clients.

Completed during an early phase of a deal, these largely “hands-off” analyses are used to:

Inform better decisions about which target is likely to be most compatible from a cultural perspective
Gain a clearer view about organisation fit and the issues that need to be addressed early
Factor cultural differences and similarities into the negotiation process
Guide due diligence investigations
Test alignment of senior leaders on both sides of the transaction and educate them about the strengths and differences in how they operate today and how they need to operate in the future
Use the information as a platform to engage and communicate with employees
Build more robust integration plans

The purpose of early-stage cultural due diligence is to systematically and comprehensively frame and prioritise the critical cultural integration risks inherent in a deal. A comprehensive report is developed based on insights gained from a structured process to collect and draw inferences from public and archival data on several key organisational dimensions, such as organisational vision and mission, leadership, organisation design, operating model, brand and reputation, corporate responsibility, cultural identity, reward and recognition, talent management, training and skills, diversity, and employee relations. Where access is available, the report is often supplemented with interviews and/or a quick executive culture survey.

This high-value information is provided quickly and at the “right” time to positively influence negotiations and integration planning.

To learn more, listen to the replay of Mercer's recent virtual roundtable on this topic.

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