Acquisitions thwarted by cultural differences

Research released by management consultancy Hay Group suggests that half of European mergers fail to achieve their stated objectives because of poor integration of cultures.

This comes as no surprise to Ian Tomlinson-Roe, partner at the HR services arm of professional services firm PricewaterhouseCoopers.

‘One of the biggest barriers to the success of an acquisition is the non-alignment of cultures,’ he says. ‘Organisations typically don’t spend a lot of time understanding the culture of the target company, understanding their own, and identifying what needs to change.’

Tomlinson-Roe adds that a successful “alignment of cultures” should take into account reward structures, performance management, terms and conditions of employment, and the overall structure of the combined organisation, as well as more intangible issues such as communication style.

Even when managers attempt to bring the merged companies together, their best efforts can backfire, according to Stuart Hearn, partner at plusHR Consulting.

‘The worst thing you can do is take everyone to the pub,’ he comments. ‘It sounds like a good idea, but what happens is people get drunk and all their anxieties come out. Often the group separates into two sides and people won’t talk to each other.’

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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