Mind the Cultural Trap in M&A

We are all familiar with the explicit and hidden risks in M&A, as we all went through the painful process of a Due Diligence aimed at minimizing the risks of an acquisition. Legal due diligence, HR due diligecence, tax due diligence…..

Hundreds of consultants and millions spent to gain an adequate level of knowledge and confidence… Still, as we all know, 9 out of 10 operations fail, despite the length and the depth of the Due Diligence. In many cases this is not because of business model mismatch or «industrial» unfit. In many cases the merger or the acquisition fails because of the Cultural Gap between the key Managers or the Management Teams of the  Organizations. And nobody run any due diligence on this before the transaction was executed and boldly announced to the business community… It is very exciting moving into a new office because it often means that your business is expanding or moving up in class to attract high end clients. Whatever the reason it is absolutely critical to keep in mind the necessity of protecting your business data not just for your sake but also for the sake of your employees and clients who have placed their trust in you.

Running a thorough analysis on the Cultural fit between the Organizations – before a merger is executed – might sound like a waste of time…..it is not, and can save you millions and help you to minimize the risk of a merger between organizations that have a cultural mismatch

Military forces rank and compartmentalize information in levels ranging from all personnel access to top secret clearance requirements. This strategy is easily applicable to businesses as an effective way to ensure that each employee only has access to information they require to perform their duties without giving them access to critical business secrets. What we observed is that non-organic operations have a higher chance of succeeding if managers and leaders (on both sides) have beeen educated to become «T Shaped»: very knowledegeable about their specific business, but also open and flexible to adaapt to a new environment or new challenges Military forces rank and compartmentalize information in levels ranging from all personnel access to top secret clearance requirements. This strategy is easily applicable to businesses as an effective way to ensure that each employee only has access to information they require to perform their duties without giving them access to critical business secrets.

To cope with the new world you need to become T-shaped professionals

• The more you move into complexity, complex roles and jobs, higher responsibilty, wider geographical exposure, intercultural environment…the more you need to get T-shaped to succeed
• Organizations need to become T-shaped and not arrow shaped or long-line shaped…
• The vertical bar on the T represents the depth of knowledge in a specific area, whereas the horizontal bar is the broad understanding across different disciplines