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How To Avoid The Culture Clashes That Undermine Mergers

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M&A is surging, but as many CEOs are learning the hard way, announcing a deal and then making it work can be two very different things.

Deals that look great on spreadsheets can still hit severe obstacles when companies struggle to merge their cultures and work together effectively. With global deal value hitting a record high of $5.9 trillion in 2021, the business world is sure to hear more about corporate culture clashes that lead to acrimonious break-ups.

One of the highest-profile recent examples of how cultural dissonance can bog down mergers is Amazon’s takeover of Whole Foods. The online retail giant’s obsession with data-driven standardization and low costs clashed with the grocer’s values of personal touch and emphasis on quality and health.

With a combined 30 years of experience on mergers worth billions of dollars in multiple countries, we’ve seen time and again how a lack of cultural integration weakens and in some cases dooms M&A deals.

CEOs sometimes realize the extent of the problem only when it’s too late, after the issues have started to corrode the merger from the inside, resulting in stalled progress on key goals, poor morale, and high turnover.

The No. 1 thing that CEOs need to appreciate is that mergers are as much about the people as they are about the numbers; it will be really hard to achieve a number goal without the people fully on board. Executives must acknowledge the anxiety and uncertainty that staffers inevitably feel after an M&A announcement.

Communication is key. Leaders should discuss the big issues for employees head-on. Reorganization, and how it may impact each individual, is always at the forefront of everyone’s mind.

By holding regular town halls that encourage genuine two-way dialogue, leaders can get out ahead of any merger-related issues that are affecting confidence and morale. Honesty, transparency, and candor go a very long way in establishing trust with teams.

Some leaders may be uncomfortable with town halls. After all, few people enjoy tough questions from unsettled people.

The solution is to be very intentional about what the meeting should accomplish by setting clear boundaries around what is going to be covered.

Top executives can head off problems by making sure the merged company is aligned on its new vision and values. It’s also important to agree on what the company doesn’t stand for anymore. That helps avoid the wasted energy of returning to the “old way” of doing things.

While some uncertainty is natural after a big merger announcement, leaders should embrace the little things that build unity. Swag bags with new company badges, hats, and t-shirts can foster togetherness and reduce the “us-vs.-them” mentality that is common after mergers.

It’s also crucial to remember that integration fatigue is real. Merger work often comes on top of regular workloads, making it a recipe for manager burn-out. Always keep a close eye for signs of fatigue.

Wise CEOs will respond to merger fatigue by calling a full pause to integration work. That might take a week or two, but the breather can be worth it. Teams respond positively when they know leaders are sensitive to their capacity levels.

Managers sometimes lean heavily on a few star individuals to run integration efforts, but that leaves companies vulnerable when those people burn out. Leaders should ensure they are fully optimizing the available talent, allowing more employees to “buy in” the new culture and to give the process an interdisciplinary feel.

Mergers and acquisitions are engineered to boost the bottom line, but the numbers will never be fully realized until the people are fully cooperating and embracing the new culture, too.


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