mergers and acquisitions culture clashes - diagnosing and dealing with them
TRANSCRIPT
M&A Culture Clashes: Diagnosing and Dealing with them
Philip H. Mirvis
Fortune magazine “merger maven”
with Mitchell Marks
@DenisonCulture.com
M&A Culture Clashes: Diagnosing and Dealing with them
Philip H. Mirvis
Fortune magazine “merger maven”
with Mitchell Marks
@DenisonCulture.com
Merger hit rate
65-85 % of Mergers and Acquisitions Fail
Vs. precombination earnings of 2 cos.
Vs. promised returns by executives
Vs. costs of capital
WHY?
Combination Phases
Phase
Typical
Emphasis
Successful
Emphasis
Pre-Merger Financial Strategic
Merging Political Transition
Planning
Post-Merger Damage
Control
Value
Creation
Define the End State
ac
qu
ire
d
Theoretic Synergies
Leading Edge
Technology
Broader User Base
Faster Time to Market
Product Reliability
Technology Transfer
Company A
Engineering &
Marketing
Quality
Matrix
Planning
Professional
Collegial
Teamwork
Our Way
Company B
R&D
Speed
Functional
Ready, Fire, Aim
Entrepreneurial
Political
Star System
My Way
Think
Organization
& Culture
How and
where to
Integrate?
Degree of Integration
What’s happening
in this picture?
Company A Company B
Physical Signs and Public Behaviors
Norms and Values Private Behaviors
Beliefs on „Human Nature and Reality‟
“Layers” of Culture
Culture Clash: Stages
1. Perceive Differences
2. Magnify Differences
3. Stereotype
4. Denigrate
Same or Different?
Very Different!
They are all that way
We are good; they are not.
Business Consulting
Economic Consulting
Perceive
Differences
Magnify Differences
Stereotype
We vs. They
Win vs. Lose
Diligent Due Diligence
Synergies: Strategic and Financial “Fit”
Organizational and Cultural Fit– Complementary organization structures/systems– Depth of management talent– Understandings of the market– Cultural norms and values– HR relations, stakeholder issues
Do your homework-Internet, reporters, academics, retirees, former employees, etc.
Culture Surveys!
The Denison Organizational Culture Model
Adaptability
Translating the demands of the
business environment into action
“Are we listeningto the marketplace?”
Mission
Defining a meaningful long-term direction for the organization
“Do we know where we are going?”
InvolvementBuilding human
capability, ownership, and responsibility
“Are our people alignedand engaged?“
Consistency
Defining the valuesand systems that are
the basis of a strong culture
“Does our systemcreate leverage?”
Software Acquisition
Overall strong profile
Key areas for leverage: Teamwork, Empowerment, Creating
Change, Agreement and Coordination & Integration
Need for Strategic Direction & Goal Alignment
Integrated IT Company
Stronger Internal Focus
Key areas for leverage: Teamwork, Empowerment, Core
Values, Agreement and Goals & Objectives
Need for Strategic Direction, Capability Development & ADAPTABILITY
Software Acquisition Integrated IT Company
Culture & Integration
Integration:
How important
to Strategy?
Savings?
Synergy?
High
Low
Easy Hard
Culture Clash:
Ease of Integration?
Combine
Quickly
Combine as
Needed
Combine
Carefully
Coordinate,
Combine
Slowly
Separate
Post merger cultures
Multicultural
Integrated: Distinct but all part of the family
Pluralistic: Many tribes, in confederation
Segregated: Superiors and inferiors
Monocultural
Melting Pot: One “happy” family
Pressure Cooker: One family or else
Ethnocide: Kill „em off
