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How to make an acquisition work

  • Describe some of the challenges with a corporate acquisition
  • Identify ways to mitigate any culture clash
  • Explain when a boss should announce a merger to employees
CPD
Approx.30min

A buddying system, which connects people in similar roles, can help build relationships, share knowledge and smooth the curve.

Pre-merger due diligence generally focuses on things that are more measurable, such as financial and compliance data but culture is increasingly being seen as an equally important element. Schroders halted progress on its potential acquisition of M&G earlier this year, for example, due to worries about how M&G would fit into the company’s culture, according to press reports. 

Culture is primarily a 'soft' concept, so how can it be identified?

It can of course be outlined in formal company values or factored into policy, but more often it is the product of conversations, interactions and witnessing how a company’s people interact and represent their business. It should definitely be spoken about from the earliest conversations, but nothing replaces getting inside the business and seeing its culture in action.

This will enable both parties to identify any gaps and proactively project manage these. This does not mean all gaps must be closed and some can even be safeguarded – when Disney acquired Pixar, for example, they apparently agreed to a set of rules protecting elements of Pixar’s more relaxed culture, which meant that Pixar employees were free to choose the titles on their business cards and could even continue their annual paper aeroplane contest.

It is also key to recognise that employees need time to adjust and make sense of proposed changes. Senior team members may have been preparing for change for months but they can often forget that others are only at the beginning of that process. It is important not to have restrictive timelines for embedding new working models, therefore, and to support and champion change visibly, not only throughout the launch and rollout, but for an extended period after that. 

2. The importance of leadership 

Before employees can support change in an organisation, they have to understand its rationale. This is where positive leadership is vital, especially in terms of the owner/s of the acquired business. They need to effectively act as cheerleaders for the deal, outlining to employees why the merger or acquisition is taking place and how it will strengthen and benefit employees and their company. 

The ability to do this authentically, however, relies heavily on those at the top being genuinely engaged throughout the M&A activity, when they themselves are often dealing with their own experience of the changes.