When a firm decides to undergo a merger or an acquisition it may seem black and white – you project the financials, preach the synergies, develop a build down schedule and share the vision for the future. However, in reality when it comes to mergers and acquisitions, there is much more grey area than one may think. In fact, it is estimated that roughly 80% of all mergers and acquisitions fail (https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook). This is not due to poor financial projections or legal implications, rather it usually comes down to one single factor: people.
In most situations, organizations do a great job of figuring out the “obvious” risks of mergers, but do a poor job of calculating the “hidden” risks associated with the change. A merger or acquisition is like a marriage; you cannot force two people together and assume it will work. When acquisitions work, they are like a great marriage maintaining the best of both worlds. A successful integration is almost tangible and can be felt in the environment. Walking through the Facebook offices only to see all the employees taking selfies in Jessie the Instagram car, or Equinox employees never missing a SoulCycle class and wearing their “Soul Gear” around town are examples of how two cultures can successfully mesh together. These integrations of culture are key – they are where the value is captured or the transaction dies a slow expensive death.Read More