Typically, a merger or acquisition focuses on identifying overlapping business processes and how departments will be integrated for maximum efficiency and performance. While these are no doubt crucial considerations, another important aspect of successful mergers is usually only considered until it is too late to make actionable decisions. When approaching a potential merger, leadership must be certain they can answer the question: "What challenges will we face in integrating these two distinct organizational cultures?"
Simply because two organizations offer similar products or services, this in no way implies that they share the same internal processes or policies. Many executives seem surprised by this notion, as they have become so entrenched in their own company that they rarely consider how or why another would do it differently. However, these differences need to be weighed carefully before the deal, or organizations can expose their merger efforts to unnecessary risk.
Leadership must understand certain cultural dynamics of the other organization, including any existing morale concerns, talent development initiatives and internal communication pathways. While these may seem like obvious considerations, they are unfortunately often forgotten in the rush of activity and analysis that preludes a merger.
In fact, The Harvard Business Journal reports on the case of the attempted Publicis and Omincom merger, which would have resulted in the world's largest advertising company. However, the $35 billion deal unraveled when both parties failed to consider the management structure of the resulting company and disagreed on the proposed operating strategy.
"We underestimated the cultural differences, and if I had the answer I would have brought it up," Omnicom CEO John Wren told the source.
As a result, shares of both companies saw declines, and months of merger-related activity was wasted. Your organization can avoid similar results by retaining change management consulting to ensure cultural integration receives the attention it deserves.