The primary driver for mergers and acquisitions – also known as “organizational marriage” – is revenue gain, however this approach rarely takes account of cultural differences which may inhibit successful adaption. Because culture is an essential element in an organization, culture analysis should play a major role in an acquisition.
Various studies provide compulsive evidence of the damage that organizational culture clashes does to shareholder value post an acquisition.
Organizational culture is central to the success of mergers and acquisitions
A study by KPMG found that 83% of international mergers failed to deliver on their promise of shareholder value. A Moeller and Schlingemann study showed similar results: of 4430 international acquisitions by US companies, the majority were characterized by significant under performance.
The overwhelming factor in the failure of acquisitions is that of organizational culture clashes, punctuated by a lack of clear strategic direction to manage this roadblock.
This organizational culture clashes cannot simply be swept under the carpet or ignored. It has to be managed! But not without a serious investment of time and money.
Its potential disruptiveness can be minimized. When properly managed, cultural clash can result in a post-merger organization that can better achieve strategic and financial objectives than either partner could do on their own.
Effective transfer of information and capabilities between the integrating partners and thus the use of synergies will only be successful if both partners show some understanding and respect of each others organizational structures, processes, corporate culture and emotions.
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Impact of organizational culture clashes – Culture shock — https://www.torbenrick.eu/t/r/hsq
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