Taking M&A Transactions to the Next Level: Corporate Culture

Corporate Culture: Taking M&A Transactions to the Next Level

The coveted concept of synergy is thrown around continuously when discussing M&A, and yet it is so often left unprioritized during the heated process of executing a deal. As such, a company owner might be inclined to confirm a seemingly lucrative transaction or opportunity, without truly investing enough time in analysing the target’s corporate culture. Invariably, this is an almost natural response for a business owner, who in all practicality, just wants the best for their company. However, to truly do the firm justice, the owner must comprehensively evaluate whether the acquisition target is 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; a situation that many companies that have recently expanded via acquisitions unfortunately find themselves in. Resultantly, a lack of unity at an internal level can lead to a range of detrimental outcomes such as 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.

After all, one can focus on the financials all they want in the pursuit of that bargain deal, but if a transaction ultimately fails due to a lack of cultural integration, then what first appears to be a money well spent situation will become an avoidable instance of hard-earned profit gone to waste. Once again, it comes down to pure human temptation, and being able to turn down the option of executing a deal quickly, for the sake of truly thinking things through. What one might forego in the short-run, in the form of being able to report the merger, enjoy the spoils of the positive press and lap up the praise, one will truly advantage from in the long-run by ensuring that either their deal will in fact benefit the firm overall, or that a disaster waiting to happen is avoided.

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, whereby together in collaboration, two new partners are able to bring out the best in one another such that 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!”

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