Firms involved in mergers and acquisitions (M&As) are losing millions of pounds as a result of cultural integration issues, a survey has found.
More than half of the 119 organisations across the Americas and Europe surveyed by consultants Mercer reported that the success of M&A transactions was marred by unsuccessful cultural integration.
Asked to estimate losses to their company in recent M&A transactions, 44 per cent of Americas firms said that between $1 million (£550,000) and $5 million (£2.8 million) was lost or not realised. Of the European firms, 43 per cent suggested losses of between €1 million (£800,000) and €5 million (£4 million).
Elisa Hukins, leader for cultural integration at Mercer, said organisations that had invested in structured cultural integration processes and programmes from as early as the due diligence phase were reporting a more positive impact.
She said: “Organisations are starting to turn this tide by developing processes, tools and capabilities aimed at reducing the risks and taking advantage of the opportunities presented by organisation culture before, during and after a deal closes.”
Bob Bundy, Mercer’s M&A global leader, added that companies should start assessing cultural differences that would affect deal value as early as possible during the initial consideration of a deal.
“It is remarkable just how much information we are able to gather and analyse even without ‘touching’ the target,” he said. “We are able to inform senior teams about how differently the two organisations operate and behave, and identify potential challenges and risks to deal success.”
But the survey also highlighted the fact that many organisations were not well prepared to manage cultural integration issues effectively. While nearly a quarter of companies are moving towards developing a more formal cultural integration process, 68 per cent still do not regularly use a systematic approach to identify gaps between organisational cultures.