Corporate Culture – Mergers & Acquisitions

There is a plethora of documented studies on Mergers & Acquisitions (M&A) failure rates.  Depending on which source you use and which markets are evaluated, these failure rates vary from 40 to 80%.  When these figures are correlated with transaction volumes and dollar value, this failure rate becomes even more depressing.  The figures below are total volume and dollar value of all USA and USA cross-border M&A activity taken from Mergerstat.com:

2008 - 8,268 transactions totaling 865.7 billion dollars	DCI Solution
2007 - 10,574 transactions totaling 1,345.3 billion dollars
2006 - 11,750 transactions totaling 1,484.3 billion dollars

There are many reasons cited for M&A failure, however, a large percentage of M&A failures are preventable.  Most failures are not because of poor financial valuations, floored legal opinions or auditing skills.  In fact, the number one reason cited is “culture clash”.  Savvy business leaders are now saying that they need to audit and to integrate intangible assets such as corporate culture into the M&A portfolio of tools. Unfortunately, there is still a lack of focus not only during the due diligence stage, but also as part of the post merger integration strategy.

If savvy business leaders believe in cultural due diligence, the question is why is corporate culture due diligence and merger integration not being undertaken?  The very simple answer is that most business leaders are unsure of how culture can be measured and what cultural elements need to be reviewed.   Click on the DCI solution icon above to see how we can help you navigate this process.