The coveted concept of synergy is thrown around continuously when discussing M&A. Yet it is so often left unprioritized during the heated process of executing a deal. A company owner might be tempted to approve a seemingly lucrative deal. They may not spend enough time analyzing the target’s corporate culture. Invariably, this is an almost natural response for a business owner, who just wants the best for their company. However, to truly do the firm justice, the owner must comprehensively evaluate the acquisition target. It must be a genuinely viable fit at a cultural level for the firm.
Keep the wheels turning
The benefit of acquiring a firm that fits into the corporate culture of your company speaks for itself. Like a well-oiled machine, a business that is functioning well will have each and every member playing their part, executing their role well, and in turn promoting the overall success of the company. Such a scenario becomes increasingly challenging to achieve when there are elements of disharmony, disagreement or varying visions within a business. This is a situation that many companies that have recently expanded via acquisitions unfortunately find themselves in.
The cost of misalignment
Resultantly, a lack of unity at an internal level can lead to a range of detrimental outcomes. These include reduced efficiency or output, arguments between employees and management, or even workers leaving their posts as a direct result of their disillusionment with the company’s new formation. In turn, there must be an appreciation for the fact that an integrated, synergetic corporate culture post-acquisition should not be considered as a nice-to-have, but as a must.
One can focus on financials all they want when pursuing a bargain deal. However, if a transaction fails due to poor cultural integration, what seemed like a smart investment becomes wasted profit. It comes down to resisting the temptation to execute a deal quickly. Foregoing short-term recognition, positive press, and praise can provide long-term advantages. By doing so, you ensure the deal benefits the firm or avoid a potential disaster.
It is worth it in the end
It is then at this point that the hard work really pays off. After having established that your target acquisition will integrate well into your company’s corporate culture, then you have the opportunity to truly take your firm to the next level. Much like any solid partnership, it advocates for the notion that 1+1≠2, but rather 3 or 4 or 5. Together in collaboration, two new partners are able to bring out the best in one another. Thus the firm can achieve exponential results beyond their usual output. In turn, the well-oiled machine won’t just function. It will fire on all cylinders, at a level that had not been previously achieved before.
The morale of the story can be traced back to one of the more famous children’s fables by Aesop, The Tortoise and the Hare. If a business owner who closes a lucrative deal without checking for cultural synergy is the speedy Hare of the story, then the owner that takes their time to assess their target’s ethos and philosophy will play the part of the Tortoise. As such, this owner will take the time to evaluate their potential acquisitions holistically at a corporate culture level, in comparison to the Hare who takes the process for granted and rushes right through it or skips it altogether. And just as Aesop so wisely alluded to, it will be the “slow and steady” that ultimately “wins the race!”