Skip to main content

Mitigating the culture-clash in M&A


The world was turned on its head by the onslaught of COVID-19, leaving many businesses struggling to survive and thrive. Despite this upheaval, the fierce pursuit of success through mergers and acquisitions (M&A) has continued.

In 2021 alone, a staggering $5 trillion was spent on M&A activity, a testament to the enduring desire for growth and dominance.  To ensure successful M&A, one crucial factor must not be neglected – mitigating the culture clash with communication strategy and cultural alignment activities.

Drawing from my experience working on more than ten $1 billion plus M&A projects over the past 20 years, I have witnessed firsthand how poor communication can lead to catastrophic failures while successful communication can make all the difference.

As each merger and acquisition brings its own unique challenges, there are crucial boxes to check off to ensure that all communication runs smoothly.

But of all these essentials, cultural integration reigns as the most crucial of them all. This aspect is just as important as the merger of assets, those involved are humans driven by both their individual personalities and the shared culture they come from.

When two companies with vastly conflicting cultures come together, decision-making becomes arduous, and effectiveness is greatly hindered. Identifying the existing gaps in culture and finding ways to bridge them is essential in building a unified vision for the future of the newly merged entities.

I have seen the culture clash up close on multiple occasions, most notably when Compaq acquired Digital in 1996 and when HP acquired Compaq in 2001. Issues around these M&A projects are widely reported.  However, lesser known are the stories surrounding the  significant acquisitions made by Digital prior to being subject to the acquisition by Compaq. I was personally involved in all of them.

I distinctly remember being called by my boss while heading home to Norway for my Christmas holiday in 1990 and being told that I have to go to Dusseldorf instead of Oslo. Digital Equipment Corporation had acquired the majority of Mannesmann Kienzle, a prestigious technology company with a workforce of 4000 employees.

However, despite their technological prowess, Mannesmann and Digital had vastly different cultures. I recall arriving at the Mannesmann headquarters pre-announcement to develop the communication activity, dressed informally as was the norm at Digital, only to be greeted by waiters donning gloves and the air of formality on the executive floor of Mannesmann. It was clear that merging these two cultures would be no easy feat. Similarly, taking over Philips Information Systems division six months later also became a cultural challenge.  Yet in the press release, we used “cultural fit” as a foundation for the merger-positioning.

Peter Drucker said “Culture eats strategy for breakfast”.   Having a solid communication strategy for driving alignment of culture is crucial in every M&A deal.  Last year we saw evidence of how important and effective this can be.  A client had acquired a 4000 strong company in a foreign market, and we were engaged to support the integration.  To have a trusted external partner in such a process can make all the difference.  Trust is crucial to move people and align forces.

Some strategies we applied were:

  • Extensive confidential one-on-one senior management interviews to identify the real issues
  • Focus groups with middle management and various employee groups
  • Analysis of both companies North Star (vision, mission, values and heritage story)
  • Issues identification along all stakeholders and a detailed plan to close the gap
  • Ongoing town-hall meetings, engagement, newsletters and surveys to track progress on a monthly basis

Startup acquisitions have been steadily increasing in recent years, offering large companies access to new technologies, talent, and market opportunities.  The delicate process of merging cultures is indeed vital for driving growth and innovation, but the truth is that many entrepreneurs struggle to adapt to the cutthroat world of corporate business. Despite attempts to ease the transition with incentives and earn outs, the reality is that most entrepreneurs are consumed by fear as they are swallowed up by a behemoth entity.

And for the employees of both the acquiring and acquired firms, uncertainty looms over them, with fears of layoffs, restructuring, and cultural shifts. In such times, effective communication is crucial to ease the discomfort and chaos that ensue by proactively sharing information, addressing concerns, and taming potential conflicts before they escalate. With meticulous planning and support from a seasoned consultant or skilled internal team, companies can navigate through the stormy waters of a M&As with clear, consistent communication as their north star.

A major component of a successful PR strategy for M&As involves communicating the rationale behind the deal after it is completed; a move to justify and portray it as a profitable venture. This includes coordination between the two companies and agreeing on timing, tone, and channels of communication.  To control the narrative and shape public perception, it’s important to have a clear plan in place before, during, and after the deal. A strong and consistent communications strategy not only defines the new entity but also eases concerns and questions from all stakeholders involved, such as employees, investors, partners, customers, media, and analysts.

In the high-stakes world of M&As, even the slightest leak of information can bring down a potential deal. The pressure to keep everything secret until the contract is signed is immense. I have personally witnessed incidents where even a small leak has jeopardized the entire merger process. When it comes to communicating a merger or acquisition to employees, investors, and other significant stakeholders, time is of the essence. It may not always be possible to inform them before contracts are signed and hence it is crucial to have a well-thought-out communication plan in place to ensure that they are informed of the changes as soon as possible.

Despite careful planning and a supposedly airtight communications strategy, mergers and acquisitions can still result in failure due to a myriad of factors. But a well-executed communications strategy can make all the difference. By clearly conveying the benefits of a deal to customers, employees, and overall business growth, companies can build a strong foundation of trust and value that will endure long after the deal is signed. In short, if you invest a billion in an acquisition, I recommend you spending at least a million on communication and cultural alignment.

Rolf Olsen

CEO, based in Geneva

Rolf Olsen launched Leidar in 2010 and continues to lead the company as CEO.  He advises clients on strategy and narrative development; crisis management; and complex reputational issues on a global scale.

Should you have any queries contact us