From commercial growth to talent acquisition, there are many advantages to merging with another business. However, it’s not uncommon for mergers to fail due to a lack of “cultural alignment” – below, we consider how corporate culture works and how you can foster a seamless cultural integration during your merger.
In a commercial context, “culture” refers to a company’s underlying values. It determines everything from how the business operates to daily working practices. Your business culture shapes your commercial objectives and how you position your company in the marketplace.
Since culture underpins your entire business model, cultural clashes can significantly disrupt even the most promising merger. Cultural problems arise from issues including:
With these issues in mind, here are four tips for keeping the cultural integration side of M&As as simple as possible.
Whether you’re the acquiring or target company, it’s important to understand the other company’s cultural norms. To get a solid sense of how the company works, look at features such as:
The better you understand the other company’s culture, the easier it is to anticipate challenges and start thinking about solutions.
Friction and misunderstandings between teams can cause failed mergers. You can minimize disruption and promote cooperation by giving staff from both companies a say in how cultures should be integrated. Make sure your employees feel like their opinions matter – otherwise, you risk losing key talent.
Rather than focusing on your cultural differences, look at what you have in common, whether it’s similar decision-making practices, leadership styles, or daily working norms. Emphasizing what you have in common helps reduce the risk of negotiations becoming adversarial.
Once you have a clearer sense of each company’s cultural strengths and weaknesses, you can develop a strategy for integrating cultural elements as part of your overall merger plan.
Encourage clear and transparent communication. Address any conflicts or misunderstandings as soon as they arise to avoid disputes later. You might also consider hiring outside support to help you retain your best practices while taking advantage of what the other company’s culture can offer your business.
If you’re merging with another business, it’s important to remember the cultural implications of the transition – not just the financial or legal implications. At Ogborn Mihm Quaintance, PLLC, our M&A attorneys in South Dakota can help you complete a successful merger without losing sight of your corporate culture or your unique commercial strengths. Contact our Sioux Falls M&A lawyers now by completing our contact form or calling (605) 432-8900 to arrange a consultation.
