Did you know 70-90% of mergers and acquisitions fail?1 Fingerprint for Success (F4S) can predict the likelihood of cultural synergy with 90% reliability. In a revolutionary first, F4S maps out a tailored integration plan to support M&A alignment.
An astounding 70-90% of mergers and acquisitions fail, according to Harvard Business Review1. Without a robust integration plan to successfully unite two company cultures, many organizations set themselves up for failure.
According to Mckinsey, 95% of executives describe cultural fit as critical to the success of integration. Yet 25% cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail.7
Fingerprint for Success (F4S) can predict the likelihood of cultural synergy with 90% reliability and, in a revolutionary first, maps out a tailored integration plan to support M&A alignment. Read on to discover common cultural and business challenges in post-merger integrations – and how F4S helps organizations navigate them.
Understand the cultural fundamentals of the target company and acquiring entity on an individual and company-wide level.
Discover similarities between entities to create greater efficiencies.
Identify cross-cultural gaps to better navigate post-merger integration challenges.
Culture is a critical but often forgotten aspect of M&A integration (also known as post-merger integration). As much thought should go into cultural integration as the financial and legal aspects of a merger – ignore it at your peril.
Without giving company culture the attention it deserves, major organizational problems are almost a given. What is culture? Think of it as the ingrained aspects of an organization, such as leadership and communication styles, and company-wide behaviors, mindsets and social structures.2
At one end, you might have an established company with a traditional approach that prioritizes rigid processes and maintaining the status quo. On the other, the target company could be a fledgling start-up with an agile approach, out-of-the-box ways of doing things, and pioneering team members.
In jarring cultures like these, post-merger integration issues can easily arise. Add to this poor communication between leaders and employees, the departure of important personnel, underutilized talent, lack of motivation, and growing disharmony between the two parties and problems inevitably emerge.
Not only can cultural discord create friction, it can also sabotage the value of the deal. Naturally, any M&A agreement is undertaken to boost a company’s value – either through increased scale or cost savings – but when people aren’t properly considered, obstacles to successful post-merger integration arise and business output can drop.
Organizational culture directly affects the employee experience. As a result, the customer experience, business relationships and shareholder value are all impacted.3
Put simply, when there’s cultural friction, an M&A’s potential value decreases or disappears entirely, becoming one of the 70-90% of deals that fail.
Often, these challenges only arise after the deal is done. That’s why it’s essential to consider the cultural alignments and disparities of each organization well in advance. Organizations can then engage the right leadership, dedicated integration teams and advisory services to provide counsel on merging the two companies more effectively – and mitigate the risk of failure.
Beyond the initial cultural assessment, leaders and companies need to take steps to ensure a seamless and efficient M&A integration journey both during the M&A process and afterward. This is not to say there won’t be hiccups on the way to successful integration, but knowing what problems could arise and having an effective integration plan in place can empower leaders to pre-empt and identify problems before they do real damage.
Navigating the cultural challenges around M&A integration is a delicate procedure. Deeply understanding both team cultures well ahead of the deal and having a disciplined approach to successful integration is vital.
This is where F4S comes in. The F4S Culture Map allows you to dive into the fundamentals of each entity – the acquiring company and the target company. Using data, F4S’ 20+ years of research, and predictive analytics, the Culture Map pinpoints and forecasts personal and team motivations and attitudes. The comprehensive model and report indicates performance with statistics you can rely on in a contextualized setting.
In short, uncovering individual and company-wide working styles, communication preferences, and cultural values and affinities can reduce cultural friction in the post-merger integration phase and accelerate strategic objectives
Harnessing F4S’s extensive people analytics technology enables leaders and organizations to better predict potential cultural issues going into a merger. They can then create strategies to help tackle them.
F4S’ technology undertakes thorough due diligence with employees on both an individual and organizational level. Then, potential synergies and blind spots between two organizations can be mapped and visualized. Because strong integration leaders are such a crucial component of a successful M&A deal, F4S can also unearth the very best talent within the oganizations to unify and lead a successful integratrion.
Using validated and proprietary technology, F4S can accurately predict the cultural impact of bringing two entities together. Here’s what you can expect from the three-step process:
Analyzing the culture of the organization making the acquisition on both an individual and company-wide level is an important first step. The goal of this part of the process is to deliver a snapshot of the current state of the acquiring organization.
Working styles, employee communication preferences, and cultural values and affinities are all unearthed, along with other key cultural attributes that make an organization tick. F4S technology even pinpoints X-factors (strengths or what makes a team or organization unique) to help determine the odds of success. Crucially, organizational or team blind spots are also identified. This allows F4S to forecast any challenges.
An identical evaluation of the target company is the next step. Similar to Step 1, F4S analyzes individual and organizational work style motivations. Examples include communication styles, approaches to working, decision-making and cultural values and affinities. This can be performed across the entire organization or just on the leadership/C-suite team, depending on the needs of both entities.
Using empirical data gleaned from the first two steps, F4S assesses the similarities and differences between the two cultures. This uncovers where they overlap and where any issues are likely to arise.
This step also includes a complete analysis of what the newly merged culture will look like, an incredibly useful tool.
Once F4S has assessed both company cultures and mapped the newly merged entity, the actual work toward successful M&A integration begins.
Again, F4S takes a step-by-step approach to the union of two organizational cultures. This is generally what the process entails.
Entities receive a comprehensive report that details the newly merged entity, as well as predictions on successful merger integration.
The F4S report delivers the following outcomes:
F4S lists the strategies required to make post-merger integration easier. These include customized workshops in the short and long term.
Mergers and acquisitions is an area of corporate law. It generally involves two or more organizations that are fusing businesses. A combined company can result through merging, buying assets or shares, undergoing hostile takeovers, consolidating, or other types of transactions.4 5 6
Integration is the process that happens after a merger or acquisition deal. It’s where the organizational systems, operations, resources, and people of the target company combine with those of the acquiring organization.
M&A integration – also known as post-merger integration – is a critical part of any merger or acquisition. The post-merger integration process helps two entities identify synergies, gaps, goals, and other aspects of each organization that they can optimize. By undertaking M&A integration due diligence, both entities are in a better position to realize the predicted value of the deal.
Integration planning should kick off as early as possible – ideally at the very start of the deal. This can allow you to put effective integration teams in place and greatly increase the chance of success. It can also show employees across both organizations that thought has gone into post-merger integration, and that the newly combined company is focused on what matters. In turn, this can further help to mitigate many of the cultural challenges that could arise.