Measuring Merger & Acquisition (M&A) Cultural Risk and Compatibility (Target, Acquirer)

In this blog article, you will quickly learn the following:

  • What is the #1 success factor for M&A deals to succeed?

  • What are the top reasons M&A deals fail in terms of delivering the expected ROI?

  • The typical best practice M&A process and how this misses and/or plants a culture compatibility “ticking time bomb” that leads to the deal’s eventual failure.

  • The underlying reasons M&A deal makers are actually trying to hide these hidden M&A cultural time bombs that will leave them making top $$$ while leaving you holding an empty bag of cash in which cultures collide and chaos ensues

  • How pre-deal cultural compatibility & risks can now be measured!!

  • Examples of pre-deal measurement of Cultural Risk in M&A Deals

  • How to identify acquirer & target pre-deal cultural types

  • How to identify pre-deal culture conflict points

  • How to identify pre-deal cultural synergies (acquirer-target)

  • How you can actually change your M&A process to include pre-deal measurement of cultural risk and compatibility prior to deal closure!

Top Factors for M&A Success

Culture is top factor in M&A Success

We all know in our gut or have heard that culture is a top factor that either makes or breaks a M&A deal. Above is the proof that it actually is #1.

Top Factors in M&A Failures

Culture is a Main Factor as to Why M&A Fails

 

We also all have heard numerous stories as to how Culture consistently has made mergers a disaster, resulting in minimal or negative M&A deal return! Above is proof that culture is a top reason for M&A failures (reasons #2, #3, #4 & #8).

Typical M&A Deal Lifecycle

Culture Is Typically Ignored Until Post M&A Deal

Yet, when we examine supposed best practice M&A process life-cycles as above, we are hard pressed to find where culture is even a consideration and cultural compatibility examination most likely comes post-deal closure when it is too late. Examining whether the two cultures will work well together post-deal is like trying to stop an accelerating train from crashing into the station at 150 MPH with less than a mile to go.

Measurable M&A Cultural Compatibility Analysis Now Available!

Enter the new Cultural Measurement Tool, CultureTalk

Many that I speak to say that the main reason culture is ignored vs. the financials is that the deal makers want to profit from the transaction and are opposed to alerting the acquiring company of the latent risks.  

It is therefore mostly assumed that cultural incompatibility can be ‘managed’ via heavy handed company directives post-deal.  It lastly assumes that the ability to measure and quantify pre-deal cultural (in)compatibility is not possible. That last statement was most certainly true until culture analysis tools like CultureTalk were recently introduced to the marketplace.

First, some background on how CultureTalk was formulated. CultureTalk, is based on the work of Swiss psychotherapist Carl G. Jung who believed that human behaviors are guided by the same inner roadmap and by shared Archetype patterns.  CultureTalk answers the question ‘Who are we?’ in terms of which specific Archetype (1 of 12) best defines our overall organization.  CultureTalk also offers a companion tool to measure the Archetypes of individuals, which takes the work deeper and allows leaders to understand how their personal styles are contributing to success or conflict.

There aren’t good or bad Archetypes, but each has a strength and shadow side that we need to understand in order to drive maximized organizational effectiveness and this is especially true when merging two different Archetypal cultures.

Here is an overview of each of the 12 Archetypes:

CultureTalk Assigns Organizations (and Individuals) to 1 of 12 Archetypes

Based on Analysis Insights, CultureTalk Assigns Organizations (and Individuals) to 1 of 12 Archetypes

*Above Graphic courtesy of CultureTalk

Each of the 12 Archtypes above comes with a set of predominant strengths (shown above) and shadows that need to be understood and managed.

CultureTalk Measures M&A Cultural "Behavioral Gaps"

M&A Acquiring Company & Acquired Company Cultural & Gap Analysis

*Above Graphic courtesy of CultureTalk

By performing an organizational CultureTalk assessment, M&A Deal makers and stakeholders can quickly determine the risks, compatibilities and behavior gaps that need to be managed.

M&A Culture Conflict Analysis

CultureTalk Identifies Potential (Pre-Deal) M&A Culture Conflicts that need to be Managed

*Above Graphic components courtesy of CultureTalk and Brand Foundations

By performing an organizational deep dive assessment, M&A Deal makers and stakeholders can unearth all potential train wrecks that typically cause M&A deals to fail and then develop an action plan on how to manage these pending collision points to win-win scenarios (target company, acquirer).

Potential M&A Culture Conflicts - Revealed, Pre-Deal

Actual Cultural Conflict Points for a Recent US M&A Deal

*Above Graphic courtesy of CultureTalk and Brand Foundations

By performing a culture quadrant conflict analysis, M&A Deal makers and stakeholders can identify and isolate the specific points where merging cultures are very likely going to collide. They can then develop an organizational mitigation design and organizational development road-map to carefully and judiciously manage to these conflict points. Without this, I have witnessed the meltdown of M&A deals and, most importantly – the death knell of companies, the rapid defection of customers at a non-sustainable long-term rate (hence my CRM connection to M&A and Culture).

 

CultureTalk Measures M&A Cultural Synergies or "Connections"

CultureTalk Measures M&A Cultural Synergies or “Connections”

*Above Graphic components courtesy of CultureTalk and BrandFoundations

By performing a culture quadrant synergy analysis, M&A Deal makers and stakeholders can develop a plan for accelerating mutually compatible cultural connection (or compatibility) points. By identifying and capitalizing these cultural synergies, the two companies can adopt a hybrid culture consisting of the best of the best blended cultural practices.

That concludes my overview of measuring and managing cultural risk  pre M&A deal and how it can optimize the value of the M&A transaction

If your organization is seeking experienced assistance in measuring the pre-deal M&A risk and then managing to this risk to optimize the merger investment, then give me a call or e-mail me at 518-339-5857 or stevenjeffes@gmail.com

Lastly, this is just one article of 40+ total I have written on Customer strategy, CRM, marketing, product management, competitive intelligence, corporate innovation, change management – all of which I have significant experience in delivering for Fortune 500 companies.  In fact, my blog is now followed by nearly 160,000 world-wide and was just named one of the top 100 CRM blogs on the planet by Feedspot, alongside Salesforce.com, Infor, Microsoft, SAS, etc. – Reference this informative site here: https://blog.feedspot.com/crm_blogs/

* CultureTalk is an organizational culture assessment and audit system that provides in-depth training and materials to deliver engagements with leaders and teams. (https://culturetalk.com/)

 

* Brand Foundations is a CultureTalk Certified Partner and utilizes the suite of assessments and tools to work with clients across diverse brand development and organizational culture projects. (http://www.brandfoundations.us/)

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About StevenJeffes
About Steve Jeffes: Steven Jeffes is a thought leader in developing world-class marketing, digital marketing, e-commerce, corporate innovation, CRM, social media, loyalty, customer loyalty/retention and customer service excellence programs. The recipient of many awards (http://www.stevenjeffes.com/stevenjeffes_awards.html), Steve is expert marketing strategy design & optimization: design, development and launch of world-class and best practice marketing and social media programs; change management organizational design and process excellence in marketing, sales, customer service, engineering, product management; and development of successful sales and sales management programs for Fortune 100 companies and government entities. He holds dual B.B.A. degrees in Computer Science and Finance from Temple University and a Master’s in Organizational Design and Excellence from the University of Pennsylvania/Wharton. Steve can be e-mailed at stevenjeffes@gmail.com or contacted via phone at 518-339-5857.

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