Heifetz Halle Consulting Group

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Mergers, Acquisitions & Cultural Compatibility

Incompatibility of organizational cultures is the number one cause of failure and chronic dysfunction in mergers and acquisitions (M& A) situations. In fact, 87% of mergers and acquisitions done in the U.S. fall far below expectations or fail. The good news is that these failures are largely avoidable — if you attend to the human factors and cultural issues throughout the process. The question of whether the cultures of the two organizations can/should mesh is most often overlooked or misjudged. Problems arise due to critical differences in: values, management style, structure, internal processes, behavior patterns and the philosophy or practices of key people.

The approach of HHCG is to identify, analyze and propose remedies to minimize dysfunction and avoid failure. This process is applicable at any stage of the M& A process from diversification planning through post–merger integration. We can quickly identify cultural common ground and uniqueness and use these to guide integration efforts — how far to go to capture desired revenue or cost synergies vs. what to protect as a critical attribute. This goes a long way toward avoiding "post–merger indigestion."

Approach

The following methodology is applied to both companies:

  • Gather diagnostic information for the M&A "Human Factors" model
  • Assemble and overlay cultural profiles
  • Flag critical misalignments
  • Analyze these "red-flags"
  • Design alternative actions to address issues
  • Assist in implementation

Expected Results

At the Diversification Planning Stage:

  • Avoidance of high risk situations
  • Greater understanding of risks and hurdles
  • Recommendations regarding optimal methods and degree of integration
  • Actions required to minimize incompatibility and maximize probability of success

At the Integration Stage:

  • Minimize loss of key personnel and avoid demoralization of workers
  • Recommended sequence and timing of actions to minimize disruption
  • Recommendations regarding optimal methods and degree of integration
  • Actions required to minimize incompatibility and maximize probability of success

At the "Post-Merger Indigestion" Stage:

  • Rapid diagnosis and plan to stabilize situation (damage control, rebuilding trust)
  • Creation of clear vision of the "Desired State" (i.e. being back on course and successful integration)
  • Implementation of transitions steps to reach "Desired State"

Bottom Line:

We can help you avoid or resolve the most prevalent problems facing companies who are trying to integrate their efforts.

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