The Importance of Integrating Cultures During an Acquisition

The good news is that the acquisition closed and the puzzle pieces are starting to come together. The clients were all contacted and the vibe was that they are all in and excited about the two companies joining forces. So, the hard part is over right? Well, the hard part has just begun.

The strategy was to combine the two sales organizations as well as all the client-facing staff to better ensure the continuity of business and opportunities for growth. The key managers from both organizations were retained and while some of the roles were modified slightly, the organization chart looked sound. The pro-forma financial statements looked great. Both companies were in the same basic market space, dealt with similar type clients (not much overlap between the two), and produced the same type of work. What was different though was how they did things.

How the companies operated was very different. Their sense of urgency, communication styles, reaction times, how they planned, and many other areas, were like night and day. The two owners had glossed over this during the due diligence phase and assured each other that they could work it out. Well, it’s 18 months into the deal and it has not been resolved, and has not even been addressed. And worse yet, a few clients have defected, a key sales rep has left the company, and all of a sudden cash has become very tight. The famous management guru Peter Drucker has been credited with saying, “culture eats strategy for breakfast.”

The lesson learned is that the culture of two organizations is a critical success factor to making an acquisition, a merger, a tuck-in successful, and should never be “glossed over.” Too often the participants fall in love with the deal, the combined financials look bulletproof, and all the other distractions end up taking away from addressing the elephant in the room.

Let me know what’s worked for you in addressing these issues by leaving a comment below. Good luck and keep at it.

Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to owners and CEO’s in the Graphic Communications Industry by providing direct and realistic direction, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at mphilie@philiegroup.com.