Make It or Break It: How You Can Avoid Culture Clashes in Mergers & Acquisitions

Culture clashes can make or break a deal. Just think about a few infamous deals that fell apart, such as the Time Warner-AOL merger in 2001. In Deals from Hell, Robert Bruner analyzes the reasons for failure in depth along, including examples of deals that failed due to cultural issues.

In fact, cultural issues are still cited as one of the top reasons for acquisition failure, which often means the breakdown comes at a late stage in the process. This is hugely wasteful. Clearly, there’s no point in closing a deal only to have it collapse during integration.

With so much at stake, it’s important to ensure a successful integration of the two cultures involved. Here are just some of the questions that arise:

  • How can you avoid culture clashes?
  • Should you only purchase companies that share a similar culture as your own?
  • How can you evaluate the culture of an acquisition prospect before the deal closes?

You don’t have to purchase a company that’s exactly the same as yours. In fact, you may be buying a business specifically for its unique culture. However, you should always conduct cultural due diligence when evaluating a potential acquisition to maximize your chances of success. The place to start that due diligence is on your own turf: Before you even evaluate the culture of a target company, you need to look within.  By understanding your own business culture you’ll be positioned to talk to the right people in the other company, and ask the questions that will give you valuable insights about its culture.

Learn more about what questions to ask and what to do with the information gained during cultural due diligence in my upcoming M&A Express videocast on November 5.

Cultural Due Diligence Videocast
1:00 – 1:20 pm ET
November 5, 2015

I’ll also be answering any questions you may have at the end of the videocast. I look forward to seeing you there.


Photo Credit: Paul Hudson via Flickr cc